Moody's changed its outlook for Japanese life insurers over the next 12 to 18 months to stable from negative despite continuing ultra-low interest rates.
The rating agency said Japanese life insurers experienced a limited deterioration in their credit profiles amid low interest rates in 2016. However, the impact of low interest rates is mitigated by high mortality and morbidity margins at the insurers. In addition, Japanese insurers are changing their liability structures to help offset the low rates, the agency noted.
For Japanese life insurers, asset-liability management remains a challenge since they have have reduced investments in Japanese government bonds with maturities longer than 10 years, thereby widening the duration gaps between assets and liabilities.
