TOKYO (S&P Global Ratings) Sept. 14, 2023--Sumitomo Life Insurance Co. has the financial cushion to cope with acquiring about ¥100 billion in additional shares in Singaporean life insurer Singapore Life Holdings Pte. Ltd. (Singlife). Sumitomo Life already has a 23.22% stake in Singlife.
On Sept. 13, 2023, Sumitomo Life (A+/Stable/--) and Aviva Group Holdings Ltd., an U.K.-based insurance major, announced that Sumitomo Life will acquire Aviva's 25.94% stake in Singlife for S$930 million (about ¥100 billion). However, the number of shares to be acquired and acquisition price remain uncertain because they depend on execution of rights of shareholders of Singlife other than Sumitomo Life and Aviva.
At this point, we do not see a need to change our evaluation of our financial risk profile of Sumitomo Life or our ratings on the company. Together with the acquisition of shares, Sumitomo Life plans to acquire a total of S$500 million (about ¥54 billion) in bonds belonging to Aviva, such as permanent subordinated bonds that Singlife issued to it. Taking this into account in our base-case scenario, the company is likely to maintain capital largely exceeding that required for the 'BBB' rating category under our risk-based capital model. However, given the final acquisition amount may grow, we will closely watch development of the deal and the insurer's financial policy, including the final acquisition amount and the financing plan, such as issuance of subordinated debt. We consider the acquisition will have only a limited impact on our evaluation of Sumitomo Life's business risk profile.
This report does not constitute a rating action.
| Primary Credit Analyst: | Koshiro Emura, Tokyo (81) 3-4550-8307; koshiro.emura@spglobal.com |
| Secondary Contact: | Toshiko Sekine, Tokyo + 81 3 4550 8720; toshiko.sekine@spglobal.com |
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