CreditSights has an Outperform recommendation on Meiji Yasuda, with the report noting that it was one of the top five largest life insurers in Japan, and has a solid balance sheet strength with one of the highest solvency margins among the leading companies. The report noted that its performance was adequate with a good core profit margin.
Premiums
According to the report, while Meiji Yasuda’s standalone premiums went down by 0.9% to JPY2.1tn ($13.9bn), its consolidated premiums, including those of StanCorp, rose 0.6%y-o-y to hit JPY2.5tn. The report also showed that annualised new premiums fell 2.1% JPY94.6bn.
The report also noted the rising surrender and lapse rate for individual life insurance and annuities from 3.87% in 9M2024 from 3.58% in 9M2023, due to the higher surrenders of foreign currency-denominated insurance.
Profitability and income
In terms of profitability, the report showed consolidated core profit rose by 7.8% to JPY377.4bn. As a standalone, the report found Meiji Yasuda’s core profit increased by 9.1% to JPY314.6bn.
However, despite the increase in core profit, consolidated net income fell by 6.4% y-o-y to JPY106.7bn, due to increased provisions for contingency reserves related to insurance and investment yields, as well as reserves for price fluctuation due to market price volatility, the report said.
Outlook
According to the report, the group has revised its outlook upwards for FY2024, anticipating insurance premiums to increase to approximately JPY3.4tn, and increase from JPY3.3tn in FY2023 (+3%), mainly due to overseas business expansion.
Core profit is also expected to rise to JPY570bn in FY2024, a 1.6% rise from JPY561 bn in FY2023, reflecting the company’s confidence in capturing further growth through strategic acquisitions and an enhanced market presence, alongside higher interest and dividend income.