S&P Revises Outlook on Japanese Insurer Ratings

Standard & Poor’s Ratings Services has revised its outlook to positive from stable on the ratings of six Japanese insurance companies, “in tandem with today’s upward revision of the outlook on the sovereign rating on Japan.”

“The action pertains to the long-term counterparty credit and financial strength ratings on Tokio Marine & Nichido Fire Insurance Co. Ltd., Tokio Marine & Nichido Life Insurance Co. Ltd., Mitsui Sumitomo Insurance Co. Ltd., Mitsui Sumitomo Kirameki Life Insurance Co. Ltd., AXA Life Insurance Co., and MassMutual Life Insurance Co.,” said the announcement. S&P also noted that it has raised the rating outlooks on most of the overseas insurance subsidiaries of Tokio Marine & Nichido Fire Insurance and Mitsui Sumitomo Insurance to positive from stable. All of the ratings on the insurers were affirmed.

“The ratings on Japan have constrained those on Tokio Marine & Nichido Fire Insurance and Mitsui Sumitomo Insurance, due to the high concentration of their operations and asset portfolios in the domestic market,” S&P continued. “The ratings on AXA Life Insurance and MassMutual Life Insurance reflect the financial support they receive from their overseas parent companies.”

However, S&P said it “believes that the financial strength rating on an insurance subsidiary should not exceed the sovereign rating of the country where it operates, unless there is a guarantee on insurance payments provided from its group. Except for AXA Life, which has the same rating and outlook as its group’s core operating entities, if no unforeseen factors occur to diminish the companies’ fundamental credit quality, the aforementioned insurers will likely be upgraded if the sovereign rating on Japan is raised.”