Fukoku Life to sustain earnings growth on wider investment spread

Fitch expects this trend to continue over the next three to five years.

Fukoku Mutual Life Insurance is expected to maintain earnings growth and strong capitalisation over the medium term, driven by a widening investment spread and stable solvency position, according to Fitch Ratings.

The insurer’s positive investment spread rose to $230m (¥34b) in the first half of FY2025 (H1 FY 2025), up from $140m (¥21b) a year earlier. 

Fitch expects this trend to continue over the next three to five years, supporting further profitability gains. Core profit margin reached 18% in H1 FY 2025, compared to 15% in H1 FY 2024 and 9% in FY 2023.

Capital adequacy remains solid, with an economic solvency ratio of 251% in H1 FY 2025. Despite market volatility and exposure to domestic equities, Fukoku Life is seen to have sufficient excess capital to manage financial risks.

Fitch also expects interest rate risk to moderate as the duration gap narrows, helped by a gradual rise in Japanese bond yields. 

The company’s stable performance is underpinned by a strong customer base amongst public-sector employees.