Japan-Based MassMutual Life Downgraded To #A-#; Outlook Stable

Stocks and Financial Services Press Releases Wednesday December 27, 2017 17:35
TOKYO--27 Dec--S&P Global Ratings

TOKYO (S&P Global Ratings) Dec. 27, 2017--S&P Global Ratings today said it has lowered to 'A-' from 'A+' its insurer financial strength and issuer credit ratings on Japan-based MassMutual Life Insurance Co. (MassMutual Japan). The outlook on the ratings is stable. At the same time, we have lowered to 'BBB+' and 'BBB' our issue ratings on the company's subordinated debt from 'A' and 'A-'.

Our downgrade of MassMutual Japan reflects our view that it has become less strategically important to the wider MassMutual Financial Group. However, we believe the parent group will continue to support MassMutual Japan in the medium to long term, as demonstrated in the explicit support provided by its ultimate parent, Massachusetts Mutual Life Insurance Co. (MassMutual; AA+/Stable/A-1+), in the form of a net worth maintenance agreement. As a result, while we have revised downward our assessment of MassMutual Japan's group status to moderately strategic from strategically important, our insurer financial strength and issuer credit ratings on MassMutual Japan are three notches higher than our assessment of its stand-alone credit profile (SACP), which we have maintained at 'bbb-' in our latest review.

We revised downward our assessment of MassMutual Japan's group status mainly because we believe that the parent group's strategy for its international business, including MassMutual Japan, has shifted somewhat. Over the past few years, MassMutual has seen higher growth in the U.S. market than in its overseas businesses; although we believe the group will maintain investments outside the U.S., it may not pursue these opportunities through wholly owned subsidiaries as it has done in the past. In our view, the group's decision to sell a majority stake in Hong Kong-based MassMutual Asia is indicative of MassMutual's revised approach to its international businesses.

The outlook on our ratings on MassMutual Japan is stable, reflecting our view that the parent group intends to continue to provide consistent support to MassMutual Japan and its subordinated debt in the medium to long term. We base our view on the group's track record of support and its overall management strategy.

We may consider upgrading MassMutual Japan within two years if its SACP improves through, for example, improved financial leverage or strengthened capital adequacy.
On the other hand, we may consider downgrading MassMutual Japan within two years if the insurer's capital adequacy declines to a level that we deem as lower adequate due to deterioration in financial markets.

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