Fitch Ratings forecasts solid credit profiles for Japanese life insurers through the financial year ending March 2027, according to a recent release.
Fitch expects insurers' capital adequacy, or the economic solvency ratios under the country's new regulatory regime that took effect in March, to remain ample for their ratings.
Stable accumulation of core capital and hybrid capital issuance should support the insurers' capital adequacy levels, Fitch said.
Fluctuations in domestic bond yields have limited risk to earnings and capital because both yen-denominated liabilities and bonds are recognized at book value using amortized cost, the rating agency said.
Fitch expects major players to further acquire foreign life insurers to offset product constraints due to a shrinking population.
Majors will also leverage rising yen bond yields to expand positive investment spreads, Fitch said.