A.M. Best Affirms Rating of Sony Life Insurance Company.Business Editors OLDWICK, N.J. U.S.A.--(BUSINESS WIRE)--July 11, 2003 A.M. Best Co. has affirmed the financial strength rating of A+ (Excellent) of Sony Life Insurance Company Ltd, Japan. The outlook is stable. The rating reflects Sony Life's strong risk-adjusted capital, prudent investment portfolio and conservative policy reserve level. A.M. Best expects that the company's financial strength will remain superior to its peers in the foreseeable future despite challenging industry conditions. On a risk-adjusted basis, Sony Life is one of Japan's most strongly capitalized life insurers. The Best's Capital Adequacy Ratio Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. (BCAR BCAR Brunswick County Association of Realtors BCAR British Civil Airworthiness Requirements BCAR Bullitt County Animal Rescue (Shepherdsville, KY) BCAR Business Case Analysis Report BCAR Beaver Creek Array BCAR Buffalo Civic Auto Ramps, Inc. ), which has trended downward, indicates that the level of risk-adjusted capital is commensurate with the current rating. Furthermore, the local solvency ratio Solvency Ratio One of many ratios used to gauge a company's ability to meet long-term obligations. Notes: Derived by taking a company's net worth and dividing by total assets. See also: Asset, Asset Valuation, Balance Sheet, Fundamental Analysis, Income Statement of 1,354.2% as at fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. 2002 compares very favorably to the level maintained by its competitors. The company's balance sheet strength is well supported by its prudent investment portfolio. Nearly all invested assets are allocated to cash and investment grade sovereign and corporate bonds. Management has also reduced the duration of its fixed income assets, thereby enhancing the investment portfolio's liquidity and flexibility. Additionally, the excess reserves Excess reserves Amount of reserves held by an institution in excess of its reserve requirement and required clearing balance. Also see reserves. Excess reserves Actual reserves that exceed required reserves. accumulated--along with the profits retained going forward--will provide an additional cushion for the company. These strengths are partially offset by the shareholders' dividend expectations, the negative interest spread in the insurance portfolio and the uncertain developments in the ownership structure. In light of the Sony Corporation's return expectations, Sony Life will likely repatriate repatriate To bring home assets that are currently held in a foreign country. Domestic corporations are frequently taxed on the profits that they repatriate, a factor inducing the firms to leave overseas the profits earned there. a significant portion of earnings going forward. This will undermine the company's ability to generate capital internally at a time when risk-adjusted capital has already been pressured by premium and asset growth. The company is further challenged by its portfolio's negative interest spread. However, the impact is mitigated to a certain extent by the nature of its relatively unseasoned portfolio, which on average offers lower guaranteed rates. A.M. Best also remains cautious about uncertain developments in Sony Life's ownership structure. Although management has reiterated its intention not to forfeit To lose to another person or to the state some privilege, right, or property due to the commission of an error, an offense, or a crime, a breach of contract, or a neglect of duty; to subject property to confiscation; or to become liable for the payment of a penalty, as the result of a majority ownership of the company, the timing and feasibility of such a capital tie-up remain unclear at this juncture junc·ture n. The point, line, or surface of union of two parts. . A.M. Best will monitor these developments on an ongoing basis. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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