Japan's Nippon Life Credit Ratings Stay Unaffected After Acquiring Resolution Life, Says AM Best

KUALA LUMPUR, Dec 17 (Bernama) -- Global credit rating agency, AM Best has commented on the financial strength rating of A+ (superior) and the long-term issuer credit rating of “aa-” (superior) of Japan’s Nippon Life Insurance Company (Nissay).

In a statement, AM Best said these ratings remain unchanged following the announcement of the acquisition of Resolution Life Group Holdings Ltd (Resolution Life) on Dec 11.

Nissay has entered into an agreement to acquire full ownership of Resolution Life, a global insurance group specialising in the acquisition and management of life insurance portfolios, which mainly operates in the United States, Australia and Bermuda.

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The transaction will consolidate Nissay’s existing equity interest in Resolution Life, resulting in a wholly owned subsidiary, with the total consideration for this acquisition expected to be approximately US$8.2 billion (1.2 trillion Japanese yen). (US$1=RM4.44)

The transaction is subject to customary closing conditions, including required regulatory approvals, and is expected to close in the second half of 2025.

As part of the transaction, Nissay has reached an agreement with National Australia Bank Limited to acquire the remaining 20 per cent equity stake in MLC Life Insurance (MLC) for approximately AUD$500 million (50 billion Japanese yen).

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Post-acquisition, Nissay intends to integrate MLC with Resolution Life Australia Limited, aiming to enhance market presence within the Australian life insurance sector.

AM Best expects the acquisition transaction to have a limited impact on Nissay’s balance sheet strength assessment at the current strongest level, considering the group’s large capital size relative to the scale of the acquisition, although there could be moderate erosion of the group’s risk-adjusted capitalisation.

The company’s absolute capital amounted to US$62 billion (9.4 trillion Japanese yen) as of Sept 2024, and upon completion, the acquisition is expected to deliver immediate profit contributions.

Moreover, AM Best expects the acquisition to support Nissay’s strategic objectives by enhancing business diversification across geographies for sustainable growth in the global life insurance market.

-- BERNAMA