AM Best Affirms Credit Ratings of Nippon Life Insurance Company and Its Subsidiary

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of "aa-" of Nippon Life Insurance Company (Nissay) (Japan). Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of "a-" of Nippon Life Insurance Company of America (dba Nippon Life Benefits or NLB) (West Des Moines, Iowa, USA). The outlook of these Credit Ratings (ratings) is stable.

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

Nissay’s balance sheet strength assessment mainly reflects its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Although the company has a very large adjusted capital base, the relatively high common stock leverage suggests that its balance sheet may be exposed to considerable equity price risk.

Nissay’s operating performance has been strong and consistent, supported by relatively stable premium income and core operating profit. During fiscal-year 2018, the company continued to record lower mortality/morbidity and expense gains, mainly driven by pressure on premium revenue and increasing agency fees as a result of its channel diversification efforts. Nevertheless, an increase in interest gains helped offset the decrease in mortality/morbidity and expense gains, resulting in an increase in core operating profit to JPY 678 billion (USD 6.1 billion) as compared with JPY 668 billion in fiscal-year 2017.

Nissay is one of the leading life insurance companies in Japan with nearly a 20% market share. The company is focused primarily on its domestic market and has a broadly diversified product portfolio, supported by a strong sales representative force, as well as growing bancassurance and agency channels. The company’s overseas business is relatively modest compared with its operations within Japan.

The stable outlooks reflect AM Best’s expectation that Nissay will maintain a strong and consistent operating performance, supported by steady revenue growth through further channel and product diversification, as well as an in-force business book that can generate stable core operating profits on a sustainable basis. Negative rating actions could occur if there is material deterioration in risk-adjusted capitalization caused by substantial investment losses, or material deterioration in the company’s core operating profit.

The ratings of NLB reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its marginal operating performance, limited business profile and appropriate ERM. The ratings also take into consideration NLB’s strategic importance to Nissay, as well as operating support provided by its parent company.

NLB’s balance sheet strength is underpinned by risk-adjusted capitalization at the strongest level, as measured by BCAR, which is enhanced by a conservative portfolio and strong liquidity measures. The ratings also take into consideration a history of NLB’s dividend payments to its parent company.

NLB has reported volatile underwriting results over the past five years. However, results improved in 2018 and through the third quarter 2019. Positive underwriting results are expected for full year 2019. NLB reported premium growth through Sept. 30, 2019. AM Best notes that NLB’s primary business continues to face challenges due to minimum loss ratio requirements, which have required the company to pay rebates. In addition, the company maintains limited product diversification with a high concentration in group major medical business and geographic concentration in a few states.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that 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 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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

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Maggie Wu
Associate Financial Analyst
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Christopher Sharkey
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Jennifer Asamoah
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Jim Peavy
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