Meiji Yasuda bags solid solvency ratio

Meiji’s Elevance Health acquisition is expected to lift its premiums.

Meiji Yasuda holds a strong solvency ratio and a strong, diversified business profile, as assessed by CreditSights.

The group's insurance premiums, excluding reinsurance income, decreased by 9.0% year-over-year (YoY) to JPY3.3t, primarily due to a drop in sales of single-premium products in foreign currencies. 

Meiji Yasuda's standalone annualised new premiums fell 21.2% to JPY128.5b, also impacted by the decline in single-premium products, although premiums for protection-type products rose by 4.2% YoY, driven by robust sales of whole-life cancer insurance.

The group's core profit increased significantly by 39.6% YoY to JPY561.0b, largely due to reduced COVID-19 claims payments and favourable investment gains from yen depreciation. 

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Meiji Yasuda Life's core profit rose 34.3% to JPY498.9b, whilst StanCorp's core profit nearly doubled to JPY71.2b due to lower claims in group and individual disability insurance.

In the last quarter of 2023, Meiji Yasuda saw a slowdown in consolidated growth but reported a significant rise in interest and dividend income, leading to a notable increase in net income after tax. 

For the full year, net income after tax surged 78.6% YoY to JPY153.4b. 

The insurer's balance sheet remains robust, with an ESR of approximately 220%, up 15 points from the end of fiscal year 2022. 

Additionally, the consolidated solvency margin ratio (SMR) improved by 38.2 percentage points to 1,048.9%, driven by higher domestic equity prices and yen depreciation resulting in unrealised gains on foreign bonds.

Looking ahead to FY24, the group expects an increase in insurance premiums partly due to the acquisition of Elevance Health. 

However, its core profit may decline due to rising operating expenses, a greater requirement for setting standard policy reserves, and higher benefit payment rates at StanCorp.