NU Online News Service, Feb. 5, 1:43 p.m. – Moody’s Investors Service, New York, is placing the insurance financial strength ratings of seven large Japanese life insurers under review for possible downgrade.
Moody’s is worried about the companies because of the “deterioration in the Japanese economy, the unfavorable structure of the life insurers’ operations and their uncertain capital raising prospects,” according to a statement from the Moody’s office in Tokyo.
“All of the Japanese life insurance companies are under significant pressure due to the deteriorating economic conditions and the poor performance of the Japanese stock market,” Moody’s says. “These factors contribute to sluggish sales of new contracts and high instances of policy surrender and lapsation.”
Meanwhile, the firm says, Japanese interest rates are still low and, in many cases, insurers are continuing to earn lower rates on their assets than they have promised to pay customers.
Japanese life insurers have been pursuing mergers, acquisitions and alliances, but those moves do little to correct the underlying structural problems in the sector, Moody’s says.
The companies on the Moody’s list include two of the biggest, best known, most highly rated Japanese life insurers, The Dai-ichi Mutual Life Insurance Company, Tokyo, and Nippon Life Insurance Company, Osaka.