A.M. Best Assigns Rating to Nippon Life Insurance Company.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--June 9, 2004 A.M. Best Co. has assigned a financial strength rating of A+ (Superior) to Nippon Life Insurance Company Nippon Life Insurance Company (日本生命保険相互会社 (Nippon Life) (Japan). The outlook for this rating is negative. At the same time, A.M. Best has upgraded the financial strength rating of Nippon Life Insurance Company of America to A- (Excellent) from B++ (Very Good) due to the implicit and explicit support it receives from its parent organization. (See related press release on Nippon Life Insurance Company of America, June 9, 2004.) The outlook for this rating has been revised to negative from stable. The rating of Nippon Life reflects its leading market position in the Japanese life industry, its strong and consistent profitability and sound capitalization. Nippon Life has been the industry leader since 1899, with premiums of JPY JPY In currencies, this is the abbreviation for the Japanese Yen. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 5.1 trillion (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 49 billion) in fiscal year 2003 and an asset base of JPY 45.3 trillion (USD 429 billion). It has achieved approximately a 20% market share for the past 10 years, notwithstanding the severe changes that occurred in the Japanese life market. Nippon Life has a well-diversified portfolio Well-diversified portfolio A portfolio that includes a variety of securities so that the weight of any security is small. The risk of a well-diversified portfolio closely approximates the systematic risk of the overall market, and the unsystematic risk of each security has been with multi-channel distribution capabilities and actively participates in the growth business segment, such as the medical and annuities market. The operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of JPY 300-400 billion (USD 3-4 billion) after the regulatory dividend to policyholders is expected to be maintained as the negative interest margin is confined con·fine v. con·fined, con·fin·ing, con·fines v.tr. 1. To keep within bounds; restrict: Please confine your remarks to the issues at hand. See Synonyms at limit. within a manageable level while investment profitability is likely to improve. The company is reallocating its asset portfolio by gradually shifting from equity to fixed-income assets to enhance the stability of its investment income. The company maintains strong capitalization and effective fund-raising options as compared to other domestic life companies in the market. Furthermore, the company intends to further strengthen the current capitalization going forward. Offsetting factors include Japan's competitive life insurance marketplace due to deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. and liberalization lib·er·al·ize v. lib·er·al·ized, lib·er·al·iz·ing, lib·er·al·iz·es v.tr. To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . . of the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industry, as well as entry of foreign companies and non-life insurers into the life market. High cancellation rates combined with the changes in demographical structure in Japan have resulted in slower new premium growth. All these factors have directly caused the decline of the company's in-force business in recent years. Competition is especially severe in the growth business area, which includes individual annuity and the medical insurance market. Nippon Life is challenged by banks in the savings product market and is also being challenged by foreign players and life subsidiaries of major non-life companies in the medical insurance market. The negative outlook reflects the ongoing difficult underwriting environment, as well as the anticipated continuation of its negative margin. 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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