MassMutual Japan Ratings Affirmed At #A-# After Announcement Of Acquisition By Nippon Outlook Remains Stable

Stocks and Financial Services Press Releases Monday March 5, 2018 17:05
TOKYO--5 Mar--S&P Global Ratings

TOKYO (S&P Global Ratings) March 5, 2018--S&P Global Ratings today said it has affirmed its 'A-' insurer financial strength and long-term issuer credit ratings on Japan-based MassMutual Life Insurance Co. (MassMutual Japan). The outlook remains stable. At the same time, we have affirmed our 'BBB+' and 'BBB' ratings on the insurer's subordinated debt.

The rating affirmation follows Nippon Life Insurance Co.'s (A+/Stable/--) announcement on March 2, 2018 that it will acquire MassMutual Japan. We believe the Nippon Life group aims to tap into the business strengths of MassMutual Japan. These strengths include products targeting the high net-worth market, MassMutual Japan's product development expertise, its distribution channel of mainly major banks and brokerages, and its support network for them. In our opinion, these factors will complement Nippon Life's existing businesses and make MassMutual Japan a subsidiary of high strategic importance within the Nippon Life group. In addition, given the Nippon Life group's business strategy, we believe that it is highly likely to support MassMutual Japan if the insurer faces financial difficulties.

We expect to assess MassMutual Japan's status within the Nippon Life group as strategically important if the group completes the planned acquisition. Therefore, the credit quality of the Nippon Life group is likely to underpin our ratings on MassMutual Japan. Also, we will likely continue to derive our subordinated debt ratings on MassMutual Japan by notching down from our long-term issuer credit rating on the insurer, which takes into account the likelihood of extraordinary group support. We base this on our view that the Nippon Life group has a strong incentive to support MassMutual Japan's subordinated debt if necessary because it could affect the group's reputation.

The outlook is stable. We expect that our ratings on MassMutual Japan will stay stable for the next two years or so. We base this view on our expectation that our stand-alone credit profile (SACP; excluding the likelihood of extraordinary group support) for the insurer will remain stable and our assessment of the company's group status will remain unchanged.

We may consider upgrading MassMutual Japan if its SACP improves through, for example, improved financial leverage or strengthened capital adequacy. We may also consider an upgrade if the Nippon Life group adds explicit support for MassMutual Japan, or if we come to the view that the insurer's group status has surpassed our current assessment.

On the other hand, we may consider downgrading MassMutual Japan if the insurer's capital adequacy declines to a level that we deem as lower adequate due to weakened financial markets. We may also consider a downgrade if we determine that its group status has deteriorated.


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