Resolution Life acquisition could add $330m to Nippon Life's profit

Fitch views the transaction as credit-positive for Nippon Life.

Nippon Life Insurance’s plan to acquire Resolution Life Group Holdings Ltd. for $8.2b could boost consolidated core profit by approximately $330m (¥50b) annually, adding to the $5.04b (¥764b) reported for the financial year ending March 2024, said Fitch Ratings.

Resolution Life will become a fully owned subsidiary of Nippon Life upon completion of the acquisition. The insurer’s core profit from overseas operations is expected to surpass 20% of the group total within a few years post-acquisition.

The acquisition remains subject to regulatory approval in jurisdictions including Japan, the US, Bermuda, and Australia.

Fitch views the transaction as credit-positive for Nippon Life due to Resolution Life's established presence in the growing closed-book business market and the diversification it brings to Nippon Life’s global portfolio. The $7.92b (¥1.2t) purchase 

price is manageable for Nippon Life, whose consolidated net assets totalled $62.04b (¥9.4t) and cash and cash equivalents stood at $5.93b (¥899b) as of September 2024.

Nippon Life’s economic solvency ratio is expected to decrease moderately from 227% at the end of September 2024 but will remain solid.

Fitch also expects Nippon Life’s credit fundamentals to remain robust, supported by its dominant position in the Japanese life insurance market, positive investment spreads, strong underwriting in the growing health insurance sector, and reduced interest rate risk.

($1.00 = ¥152.25)