A.M. Best Upgrades Issuer Credit Rating of Nippon Life Insurance Company

Business Wire, March 6, 2008

OLDWICK, N.J. -- A.M. Best Co. has upgraded the issuer credit rating to "aa" from "aa-" of Nippon Life Insurance Company (Nippon Life) (Japan). At the same time, A.M. Best has affirmed the financial strength rating of A (Superior) of Nippon Life. The outlook for both ratings is stable.

The ratings reflect the company's superior financial soundness, continued strong operating profits and dominant market position in the Japanese life market. The company's clear focus on profitability adds further comfort to the rating.

Nippon Life's risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio, is very strong. The company has successfully increased its capital and surplus since fiscal year 2002. During this period, the local solvency margin ratio also improved, recording 1,284% as of September 2007. In addition to the strong capital, the company has started to strengthen its reserves since fiscal year 2006. The company's main objectives are to improve the soundness and increase capacity for higher dividends in the future. The plan is expected to take five years.

Nippon Life's core operating profit has been maintained at a high level, recording JPY 730 billion (USD 6.2 billion) in fiscal year 2006. Although this number is expected to decline slightly in the coming years, the company's profitability will be maintained. As it aims to enhance customer confidence through strengthening capital and increasing policyholder remuneration, maintaining strong profitability will be the key in achieving this goal.

Although Nippon Life does not hold a dominant market position in individual annuities (as it does in the individual life market), the annuity market is growing fast in Japan and the company is benefiting from this robust growth. The medical/health care market slowed down in recent years due to the non-payment issue in Japan but is expected to pick up soon. Nippon Life reached an agreement with Japan Post Insurance Company of a business alliance, which will also add to the growth momentum.

Offsetting these positive rating factors are intensified market competition and the company's relatively high equity exposure.

Nippon Life experienced a continued decline in market share in the domestic life insurance industry in the midst of the changing market environment. Foreign insurers and life subsidiaries of non-life insurers have been aggressive in gaining more market presence. However, A.M. Best believes that Nippon Life will strengthen its profile as it has employed multi-channel strategies and has become more active in the growing market segment.

Nippon Life has a high equity exposure compared to that of the industry, which could exert negative pressure on its capitalization due to the volatility of the equity markets.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.