AM Best Affirms Credit Ratings of Meiji Yasuda Life Insurance Company

AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” (Superior) of Meiji Yasuda Life Insurance Company (Meiji Yasuda) (Japan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Meiji Yasuda’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management.

Meiji Yasuda’s balance sheet strength assessment mainly reflects its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). This assessment also is supported by the company’s robust capital base and conservative financial leverage. The company’s absolute capital increased materially by 57% to JPY 5.8 trillion as of 31 March 2024, driven by substantial unrealised gains on its securities’ investments amid favourable market conditions. While Meiji Yasuda remains exposed potentially to moderate equity risk from its sizeable stock investments, it maintains sufficient available capital to absorb such risks. The company effectively manages its capital using sophisticated and transparent economic-based indicators, including the economic solvency ratio and group surplus results, as well as appropriate asset-liability management strategy.

In the fiscal-year ending 31 March 2024 (fiscal-year 2023), Meiji Yasuda delivered a strong and resilient operating performance, with premium income reaching JPY 3.3 trillion and a base profit of JPY 561 billion. This performance was supported by reduced COVID-19 pandemic related losses, increased investment gains amid favorable interest rate environment and Japanese Yen depreciation, along with a strong performance by its key U.S. subsidiary, StanCorp Financial Group, Inc. (StanCorp). Despite recent challenges from the COVID-19 pandemic and financial market volatility, Meiji Yasuda has maintained a stable return on equity (ROE) over the last decade. In the first half of fiscal-year 2024, the company also saw a 14% increase in base profit underpinned by improvement in investment gains. Over the long term, AM Best expects Meiji Yasuda’s stable in-force book of business, coupled with the prospect of a potential higher interest rate environment and growing overseas contributions, will provide sustainable support to its operating performance.

Meiji Yasuda continues to be one of Japan’s leading life insurance companies and maintains a strong position in Japan’s group insurance segment. It maintains robust and efficient agency channels and is diversifying its distribution channels further to achieve revenue growth and strengthen its positions in the domestic market. The contribution of its overseas operations gradually increased, reaching 15% of its premium income in fiscal-year 2023, supported by recent acquisitions by StanCorp. The planned acquisition of Allstate’s voluntary benefits business is expected to fortify StanCorp’s market position in the U.S. group insurance market further, supporting Meiji Yasuda’s medium-term overseas profit growth target and business diversification.

Negative rating actions could occur if there is a material deterioration in Meiji Yasuda’s risk-adjusted capitalisation caused, for example, by a substantial increase in investment risk. Negative rating actions also could occur if there is material and prolonged deterioration in the company’s operating performance caused by sustained declining trends in premium income and/or base profit. Positive rating actions could occur if Meiji Yasuda demonstrates sustained improvement in its balance sheet strength metrics although the likelihood of such actions remains limited at this time.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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