CreditSights Raises Fukoku Life Recommendation
CreditSights has upgraded its recommendation for Fukoku Life Insurance, a Japanese life insurance company, from Market perform to Outperform. The decision follows a strong performance in 9M2024, marked by growth in consolidated gross premium returns and core profit.
According to the report by CreditSights, consolidated gross premium returns for both Fukoku Life and its subsidiary, Fukokushinrai Life, rose to JPY592.8bn ($3.9bn) in 9M2024, a 2.1% increase from JPY580.9bn in the same period last year. While Fukoku Life’s standalone gross premium returns saw a slight decrease of 0.8%, the consolidated figures benefited from the performance of Fukokushinrai Life.
Growth Metrics
Key to the upgrade was the impressive growth in new premiums and core profit:
- Consolidated annualised new premiums: Increased by 11.7% to JPY27.6bn in 9M2024, up from JPY24.7bn in 9M2023.
- Standalone Fukoku Life’s annualised new premiums: Increased by 11.8%, from JPY11bn in 9M2023 to JPY12.3bn in 9M2024.
- Consolidated core profit: Rose 18% year-over-year, from JPY61.7bn in 9M2023 to JPY72.8bn in 9M2024.
CreditSights attributes the growth in part to Fukokushinrai Life’s bancassurance-driven single premium products.
The report also highlighted a 1.7% increase in consolidated profit margin, from 10.6% in 9M2023 to 12.3% in 9M2024. Net income after tax jumped 42.5%, from JPY38.5bn in 9M2024 to JPY54.8bn in 9M2024.
Solvency and Financial Strength
As of December 2024, Fukoku Life maintained a robust solvency ratio of 1,165.9%, far exceeding the minimum requirement of 200%. The company’s economic solvency ratio was also strong at 249.3% as of December 2024, though down slightly from 258.2% in March 2024. The report indicated this slight decrease was not a cause for concern, as ratios remained well above the required level.
The CreditSights report observed that the strong solvency margin ratio and high economic solvency ratio create a solid financial buffer, providing comfort regarding the company’s credit profile. It also acknowledged the company’s smaller size compared to its peers and its concentration in the Japanese market as potential limitations.
