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Moody's Skeptical About Japan

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NU Online News Service, July 18, 3:55 p.m. – Moody’s Investors Service, New York, has issued a bleak forecast for Japan’s life insurers, citing industry-wide problems such as the falling number of policies in force, a stagnant economy and a series of life insurer failures.

High unemployment rates and high bankruptcy rates are keeping some Japanese consumers from buying coverage at all. Meanwhile, many consumers who could afford to buy coverage are worried about the insurers’ asset quality, according to Moody’s new Japanese life industry outlook report.

Five Japanese life insurers have failed over the past year as a result of weak asset quality and investment losses.

Surviving life insurers with low capital reserves will have to depend on other large financial institutions to stabilize their finances while they try to reduce their exposure to the Japanese stock market, the Moody’s analysts write.

The analysts expect consumers to increase the level of pressure on the weaker life insurers, by shifting purchases toward the stronger insurers.

Better-managed companies, companies that are new to the market and a few large players should find it easier to capitalize on the shift in consumer attitudes, the analysts conclude.