AM Best confirms credit ratings of Nippon Life Insurance Company and its subsidiary

HONG KONG, January 21, 2022–(BUSINESS WIRE)–AM Best affirmed the financial strength rating (FSR) of A+ (Superior) and the long-term issuer credit rating (Long-term ICR) of “aa-” (Superior) of Nippon Life Insurance Company (Nissay) ( Japan). At the same time, AM Best confirmed the FSR of A- (Excellent) and the long-term ICR of “a-” (Excellent) of Nippon Life Insurance Company of America (NLB) (West Des Moines, Iowa, USA) . The outlook for these Credit Ratings (ratings) is stable.

Nissay’s ratings reflect the strength of its balance sheet, which AM Best rates as the strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

Nissay’s balance sheet strength rating primarily reflects its highest risk-adjusted capitalization as measured by Best’s capital adequacy ratio (BCAR). This assessment is also supported by the company’s low financial leverage. Although the company is exposed to moderate equity risk due to its equity investment portfolio, its large available capital and good access to debt markets as a well-known life insurance company in Japan and abroad should allow it to absorb this risk.

Nissay’s operational performance has been consistent and resilient amid the COVID-19 pandemic. For the year ended March 31, 2021 (FY2020), its core operating income remained stable at JPY 690 billion. Although the company’s annualized premiums on new business declined due to sales restrictions in the first half of fiscal 2020, its annualized premiums on new business have been recovering since the second half of fiscal 2020. AM Best expects the company’s new sales performance to continue to recover and the company’s stable in-force volume to continue to sustainably support its core operating income.

Nissay is one of the leading life insurance companies in Japan, with an 18% market share by revenue. The company’s sales representative base remains strong and it is working to further diversify its distribution channels to achieve revenue growth and strengthen profitability in its home market. The company continues to have modest geographic diversification, with its relatively small operations in other Asia-Pacific countries and the United States.

The stable outlook reflects AM Best’s expectation that Nissay will maintain its overall balance sheet valuation, supported by its highest risk-adjusted capitalization, as measured by BCAR. Management’s ongoing strategic initiatives and a diversified product portfolio should also support stable operating performance over the medium term.

Negative rating actions could occur in the event of a material deterioration in Nissay’s risk-adjusted capitalization caused by substantial investment losses. Negative rating actions could also occur in the event of a material deterioration in operating performance caused by a substantial decline in the company’s core operating profit.

NLB’s ratings reflect the strength of its balance sheet, which AM Best rates as the strongest, as well as its marginal operating performance, limited business profile and adequate ERM. The ratings also take into account the strategic importance of NLB to Nissay, as well as the operational support provided by its parent company. NLB’s balance sheet strength is supported by its highest risk-adjusted capitalization as measured by BCAR, which is bolstered by a prudent portfolio and strong liquidity metrics. Capital growth has lagged premium expansion over the past five years as net income has remained relatively modest and the company has continued to pay dividends to the parent company. However, the capital remains more than sufficient to bear the risks of NLB. NLB has reported volatile underwriting results over the past five years. However, results improved in 2018 and 2019, and were particularly profitable in 2020 due to the postponement of non-essential care caused by the COVID-19 pandemic. Underwriting results returned to pre-pandemic levels but remained strong as usage rebounded in the three quarters of 2021 due to a combination of higher normal usage and testing and COVID-19 treatments. During three quarters of 2021, COVID-19 testing and treatment costs at NLB were higher than in 2020, but lower than those seen in the industry, and within budgeted ranges. The ongoing pandemic has had a significant impact on NLB’s sales function by limiting face-to-face interaction, which is a key part of the sourcing process for many companies that make up NLB’s market niche. As a result, premiums declined moderately in 2020 and 2021 despite higher than historical persistence and above-market rate increases.

The company maintains limited product diversification with a high concentration in the group’s core medical businesses and geographic concentration in a few states. NLB’s strategy includes growth in its dental and optical products where profit margins tend to be higher. However, the COVID-19 pandemic resulted in further weaker-than-expected sales for major medical and ancillary business segments.

Ratings are communicated to rated entities before publication. Unless otherwise indicated, the ratings have not been changed as a result of this communication.

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 relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Assessment Activity Web page. For more information on the use and limitations of credit rating opinions, please see Best Credit Score Guide. For more information on the proper use of Best’s credit scores, Best’s preliminary credit assessments, and AM Best’s press releases, please see Guide to Proper Use of Best’s Ratings and Reviews.

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 more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

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Charles Chang
Associate Financial Analyst
+852 2827 3427
[email protected]

Jason Shum
Associate Director, Analytics
+852 2827 3424
[email protected]

John McGlynn, CFA
Financial Analyst
+1 908 439 2200 ext. 5730
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200 ext. 5159
[email protected]

Jim Peavy
Director, Communications
+1 908 439 2200 ext. 5644
[email protected]

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