TEXT-Fitch affirms Taiyo Life at IFS 'A'; outlook stable

(The following statement was released by the rating agency)

Oct 04 - Fitch Ratings has affirmed Taiyo Life Insurance Company's (Taiyo Life) Insurer Financial Strength (IFS) rating at 'A'. The Outlook is Stable.

Taiyo Life provides insurance for households, especially for women and the rating reflects the company's steadily growing and profitable protection insurance underwriting business and strengthened capital adequacy. It also reflects Fitch's expectations of continued support from the parent company - T&D Holdings, Inc. - to its group insurers. Fitch notes Taiyo Life's increasing importance to T&D Life Group due to its improving fundamentals, which are contributing to the improving trend of the whole group's creditworthiness.

Taiyo Life's underwriting fundamentals have improved since March 2009, owing to its strengthened sales force in promoting profitable protection products. The insurer's policy amount in force continued to grow 5.0% yoy in the year to March 2012, exceeding that of most other Japanese traditional life insurers.

Taiyo Life's capital position has steadily strengthened, after bottoming at end-March 2009 due to the turmoil in the Japanese equity market. Taiyo Life's new statutory solvency margin ratio (SMR) also improved to 747.3% at end-March 2012 from 670.8% at end-March 2011, despite the weak domestic equity market. The company's effective enterprise risk management (ERM) has resulted in its assets and liabilities being nearly matched in duration, which is uncommon among Japanese traditional life insurers.

Key rating triggers for an upgrade include further evidence of the company becoming more integrated within T&D and therefore becoming core to the group according to Fitch's criteria. In particular, further growth in profitable protection insurance and strengthened capital adequacy within the operating entities of T&D would be regarded as positive rating factors.

Key rating triggers for a downgrade include material erosion of capitalisation, deterioration in profitability and volatility in the embedded value within the combined operating entities of T&D. Specifically, Taiyo Life's ratings may also come under pressure if Fitch's internal capitalisation measures drop sharply, if the SMR declines below 600% or if the embedded value becomes volatile for a prolonged period at T&D.

((Bangalore Ratings Team, Hotline: +91 80 4135 5898, Bhanu.priya@thomsonreuters.com, Group id: BangaloreRatings@thomsonreuters.com, Reuters Messaging: Bhanu.Priya.reuters.com@reuters.net))