ORIX Life Outlook Revised Upward To Stable Following Same Action On Ratings Affirmed At #A-#

Stocks and Financial Services Press Releases Monday January 29, 2018 18:50
TOKYO--29 Jan--S&P Global Ratings

TOKYO (S&P Global Ratings) Jan. 29, 2018--S&P Global Ratings today said that it has revised upward its outlook on Japan-based ORIX Life Insurance Corp. (ORIX Life) to stable from negative. At the same time, we have affirmed our long-term issuer credit and insurer financial strength ratings on the insurer at 'A-'. Today's rating actions on ORIX Life follow our outlook revision on its parent company, ORIX Corp., to stable from negative and the affirmation of our 'A-' ratings on the parent (see "Outlook On Japan-Based ORIX Corp. Revised Upward To Stable; Ratings Affirmed," published Jan. 25, 2018). In addition, we are maintaining our assessment of ORIX Life's stand-alone credit profile (SACP) at 'a-'.

Our ratings and outlook on ORIX Life reflect our view that it is a strategically important subsidiary within the ORIX group as well as our assessment of the insurer's SACP as 'a-'. We believe ORIX Life depends on the group for financial support because the insurer has been suffering net losses under Japanese generally accepted accounting principles due to increasing new acquisition costs caused by strong growth in new policies. In our opinion, the ratings and outlook on ORIX Life are linked to those on ORIX Corp. as long as the credit profile of ORIX Life is commensurate with that of ORIX Corp. We therefore affirmed our ratings on ORIX Life at 'A-' and aligned the outlook on the insurer with the stable outlook on ORIX Corp.

We may lower the ratings on ORIX Life within the next 24 months if: we downgrade ORIX Corp.; ORIX Life's annualized premiums for policies in-force decline and weaken the insurer's competitive position, and we believe the decline will likely persist; or the insurer's prospective capital adequacy, as measured by our risk-based capital model, declines to below the 'BBB' threshold, which could result from factors such as faster business growth or larger interest rate risk than we currently expect.

Conversely, we may upgrade ORIX Life within the next 24 months if we upgrade ORIX Corp. and revise upward our assessment of ORIX Life's SACP. However, we consider the likelihood of an upgrade to be remote.

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