Due to Singlife’s “solid franchise” in the growing Southeast Asian (SEA) life insurance market, Fitch believes the deal to be incrementally positive for Sumitomo Life, not forgetting the diversification effect for the company.
The American credit grader also expects Sumitomo Life to continue to make bolt-on acquisitions in the SEA region through using Singlife as its operating platform.
While the transaction is subject to the satisfaction of certain conditions such as regulatory approval in Japan and Singapore, Fitch expects Sumitomo Life group’s overall credit fundamentals post-transaction to “remain sound”.
This comes about thanks to its sustainable positive investment spread as well as its robust domestic life insurance underwriting that’s backed by a moderately growing profitable health sector. The continued reduction of interest-rate risk and successful global expansion, especially in the US, are other factors.
