A.M. Best Affirms Rating of Nippon Life Insurance Company

Business Wire, Sept 13, 2005

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Superior) of Nippon Life Insurance Company (Japan). The rating outlook is negative.

The rating reflects Nippon Life's strong capitalization, strong and stable income structure and its leading market position in the Japanese life industry.

The company's risk-based capitalization improved in fiscal years 2003 and 2004. Nippon Life's local solvency ratio stood at 975.2% as of March 2005. In addition, the company's management team is committed to further strengthening its capitalization. Adding further comfort are Nippon Life's high quality investment assets with low credit risk and its efforts to reduce market risk through the sale of equity holdings.

Nippon Life's profitability is maintained at a high level with limited volatility. Due to such stable profit and the additional income created by the realized capital gains from the sale of equities, Nippon Life increased its contingency reserves by JPY 260 billion (USD 2.4 billion) and its price fluctuation reserves by JPY 135 billion (USD 1.3 billion) in fiscal year 2004.

Nippon Life is the largest life insurer in Japan with an asset base of JPY 46,559 billion (USD 434 billion) as of fiscal year 2004. In addition, the company generated life premiums of JPY 4,829 billion (USD 45 billion) in fiscal year 2004, which is a decrease of JPY 313 billion (USD 2.9 billion) compared to fiscal year 2003. The premium market share was 18% in fiscal year 2004, which is a decrease of 2% compared to the previous year. Nippon Life has a well-diversified portfolio with multi-channel distribution capabilities and actively participates in growing business segments such as the medical and annuities market.

Offsetting these positive rating factors is Japan's highly competitive life insurance marketplace and the continuous drop in Nippon Life's in-force business.

Competition is especially intense in the annuity and medical insurance markets. For the long term, it will be a challenge for Nippon Life to expand its leading position in the death protection market into the medical insurance and annuity markets.

The negative outlook reflects the ongoing, highly competitive environment and the drop in in-force business, which translates into a smaller future profit base for Nippon Life.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.> A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.