Fitch: Dai-ichi Life Acquisition Won't Hurt Sales Force Profitability

Dai-ichi Life's customer base has been built up largely through its own sales force, which attracts conservative customers who are less sensitive to premium rates and prefer consulting with sales people. By acquiring Sompo Japan DIY, Dai-ichi Life will be able to tap proactive and price-sensitive customers who shop around for products. Non-traditional life insurers, including foreign companies such as Aflac, Inc. (IFS AA-/Stable) and subsidiaries of non-life insurance groups such as NKSJ Himawari Life Insurance Co., Limited, have demonstrated their strength in this market segment with their relatively simpler and cheaper products. Dai-ichi Life is planning to use Sompo Japan DIY as its low-cost operating entity that will provide cheaper and simpler products compared with the products that its core sales force promotes. Dai-ichi Life will start distributing new products via Sompo Japan DIY's agents from 2H15, with the latter expected to change its name by then. Fitch expects Dai-ichi Life's overall credit fundamentals to continue to improve for now. This is due to: improving investment spread; resilient life insurance underwriting backed by a steadily growing profitable third (health) sector; and continued reduction of interest rate risk as the company reduces the duration gap between assets and liabilities. Contacts: Teruki Morinaga Director +813 3288 2772 Fitch Ratings Japan Limited Kojimachi Crystal City East Wing 3F, 4-8 Kojimachi, Chiyoda-ku Tokyo 102-0083 Akane Nishizaki Associate Director +852 2263 9942 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available at www.fitchratings.com. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here . IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
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