Dai-ichi Life financial leverage to remain below 23%

The planned bonds are expected to have a call option after 10 years.

Fitch Ratings anticipates Dai-ichi Life's financial leverage to remain below 23% as of March 2024, with interest coverage expected to remain at adequate levels. 

The stable outlook for Dai-ichi Life underscores the insurer’s robust capitalisation and ability to manage its financial obligations effectively.

The company’s planned US dollar step-up callable cumulative perpetual subordinated bonds issuance may reach up to $2b, will fund a subordinated loan to Dai-ichi Life's holding company. 

The bonds are expected to have a call option after 10 years, at which point a 100 basis point coupon step-up will take effect. 

Fitch highlights that the bonds include a mandatory interest-deferral feature, triggered if Dai-ichi Life's statutory solvency margin ratio falls below the 200% regulatory threshold or if Japan's Financial Services Agency issues a prompt corrective action order. 

As of end-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.