Ratings On TD Life Group Subsidiaries Affirmed At #A#; Outlooks Remain Stable

Stocks and Financial Services Press Releases Thursday January 25, 2018 18:28
TOKYO--25 Jan--S&P Global Ratings

TOKYO (S&P Global Ratings) Jan. 25, 2018--S&P Global Ratings today said it has affirmed its 'A' financial strength and long-term issuer credit ratings on both Daido Life Insurance Co. and Taiyo Life Insurance Co. The outlooks on the ratings remain stable.

The affirmation reflects the upward revision of our assessment of T&D Life Group's financial risk profile to very strong, based on our view that the group's capital level has improved. The affirmation also reflects our maintenance of the group's anchor at 'a', derived from the combination of a strong business risk profile and a very strong financial risk profile.

The group's capital level has been improving, thanks to consistent accumulation of retained earnings in recent years and changes in the financial market, such as a halt in the decline in domestic interest rates and a favorable stock market. We consider that the group will maintain its capital adequacy at a level we assess as very strong. We therefore revised our evaluation of the group's financial risk profile to very strong from strong.

We maintain our evaluation of the group's business risk profile as strong, given that the group's core operating subsidiaries, Daido Life and Taiyo Life, maintain solid business franchises in Japan. However, the group's competitive position does not significantly surpass its peers', in our view. In addition, some subfactors we assess for its risk position show somewhat high risk. We therefore choose to maintain our anchor for the group at 'a', which is the lower of two possible anchor outcomes ('a+' and 'a') from the combination of a strong business risk profile and a very strong financial risk profile.

We view both Daido Life and Taiyo Life as core operating subsidiaries of T&D Life Group under our group rating methodology. Accordingly, we equalize our financial strength and long-term issuer credit ratings on Daido Life and Taiyo Life with the group credit profile, which we assess as 'a'.

The stable outlooks reflect our view that T&D Life Group will likely retain a strong competitive position in its target markets and maintain solid capitalization by accumulating reserves from stable earnings. The outlooks also reflect our view that the group's capital adequacy will remain at a very strong level under our assessment.

We may consider downgrading Daido Life and Taiyo Life if the group's capital adequacy deteriorates significantly and either (1) its concentration on specific assets or sectors increases markedly, or (2) its unhedged exposure in foreign currencies significantly expands due to a material increase in foreign currency-denominated investments. However, we do not expect downgrades within the next two years.

We could consider upgrading Daido Life and Taiyo Life if a further improvement in group profitability leads us to change our assessment of the group's competitive position to very strong from strong, or if the group's capital adequacy improves to a level commensurate with our extremely strong assessment.

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