Fitch Sees Credit Rating Boost for Sumitomo Life Once Singlife Acquisition Finalises

Fitch Sees Credit Rating Boost for Sumitomo Life Once Singlife Acquisition Finalises

by January 10, 2024

Credit rating agency Fitch Ratings highlighted that Sumitomo Life Insurance Company’s planned acquisition of Singapore-based financial services firm Singlife is poised to bolster the Japanese insurer’s credit standing.

The acquisition, still awaiting regulatory approval in Japan and Singapore, is expected to be finalised in the first quarter of 2024. Singlife will retain its brand identity, management team, and product offerings post-acquisition.

The transaction, estimated at JPY400 billion (approximately US$3 billion), will increase Sumitomo Life’s ownership in Singapore Life from 23% to a full 100%. This deal ranks as one of the largest in Southeast Asia’s insurance sector, valuing Singlife at S$4.6 billion.

Despite the significant investment, Fitch Ratings anticipates that the impact on Sumitomo Life’s capital adequacy and financial leverage will be minimal. The Japanese insurer’s robust financial position, with net assets totaling JPY1,188 billion and cash reserves of JPY2,177 billion as of March 2023, supports this view.

Fitch Ratings foresees a positive incremental impact on Sumitomo Life’s credit profile from this acquisition. Singapore Life’s strong market position in the rapidly expanding Southeast Asian life insurance sector, coupled with the diversification it offers to Sumitomo Life’s operations, underpins this optimism.

Furthermore, Sumitomo Life is expected to continue making bolt-on acquisitions in Southeast Asia, utilising Singlife as its operational hub.

Overall, Sumitomo Life’s credit fundamentals are projected to remain robust. This stability is attributed to a sustainable positive investment spread, effective underwriting in domestic life insurance, a focus on profitable health sector growth, reduced interest-rate risk, and successful international expansion, particularly in the U.S. market.



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