Fitch Ratings forecasts that Dai-ichi Life’s financial leverage will remain below 23% by March 2024, with sufficient interest coverage levels expected to be maintained. The insurer’s strong capitalization and effective management of financial obligations contribute to the stable outlook assigned by Fitch.
Dai-ichi Life plans to issue US dollar step-up callable cumulative perpetual subordinated bonds, with a potential issuance size of up to $2 billion. The proceeds will be used to fund a subordinated loan to Dai-ichi Life’s holding company. These bonds are set to have a call option after 10 years, at which point a 100 basis point coupon step-up will be implemented.
Fitch notes that the bonds come with a mandatory interest-deferral clause, which would be triggered if Dai-ichi Life’s statutory solvency margin ratio falls below the regulatory threshold of 200% or if Japan’s Financial Services Agency issues a corrective action order. As of September 2024, Dai-ichi Life’s solvency margin stood at 864% on a non-consolidated basis and 900% on a consolidated basis, well above the trigger level, ensuring a solid financial foundation.
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