S&P Assigns 'BB+' to Saison Life; Outlook Negative

Apr 20, 2001, 01:00 ET from Standard & Poor's

    TOKYO, April 20 /PRNewswire/ -- Standard & Poor's today assigned its
 double-'B'-plus financial strength and long-term counterparty credit ratings
 to Saison Life Insurance Co. Ltd.  The outlook on the long-term rating is
 negative.
     The financial strength rating on Saison Life reflects the insurer's very
 weak operating performance stemming from relatively high surrenders and poor
 efficiency, which are pressuring earnings.  These factors are mitigated by the
 insurer's low-risk asset profile together with the benefits of potential
 access to the clients of its parent, Credit Saison Co. Ltd., a large and
 highly profitable credit card company in Japan.  In addition, Saison Life's
 capitalization is strong, supported by an increased commitment from the
 parent, which recently injected JPY20 billion.  Credit Saison is a member of
 the Saison group, which encompasses more than 130 companies.
     Saison Life is a second-tier life insurer with a 0.2% share of the market
 in terms of premium income in fiscal 1999 (ended March 2000).  A key issue in
 enhancing its market position will be Saison Life's success in implementing
 its strategic plan.  The company's management is focusing on increasing sales
 based on a consulting approach, as well as leveraging the broad base of Saison
 cardholders.  The company's business position has remained weak over the last
 two years as premium income has declined by 7.6% compared with an average
 decline of 5.7% in the Japanese life insurance industry, while surrenders
 continue to be relatively high at 11.6% compared with an industry average of
 10.5%.  Given the increased surrenders at Saison Life after recent
 high-profile failures in the industry, the earnings of Saison Life are likely
 to remain weak in fiscal 2000.  However, Saison Life, as a subsidiary of
 Credit Saison, has good access to the customer base of the Saison group.  The
 insurer is expected to generate new business among these customers in the
 future if the current strategies are successful.
     Saison Life's asset mix is relatively diverse.  The insurer's loan
 portfolio is good with few problem loans.  However, the insurer's investment
 performance was weak in fiscal 1999, mainly due to falling equity prices-the
 insurer has some crossholdings in Saison group companies-and the volatility of
 the euro.  The company's exposure to foreign currency risk remains relatively
 high.
     Saison Life's capital was previously marginal as a result of declining
 business and relatively high exposure to foreign investment markets.  However,
 an injection of JPY20 billion in perpetual subordinated loans from its parent
 strengthened Saison Life's capital significantly.  The insurer's financial
 flexibility is good, based on its nonmutual status as well as an increased
 commitment by Credit Saison to support the company's financial strength, if
 required.
 
     OUTLOOK: NEGATIVE
     The negative outlook reflects the increasing pressure on earnings in the
 Japanese life insurance sector as a whole, amid a challenging operating
 environment. Despite radical restructuring in the last three years, Saison
 Life will not be insulated from this pressure in the short term.  It is likely
 that the insurer will form alliances with other companies in the short-to-mid
 term, although what effect this will have on Saison Life's competitive
 position is not yet clear, Standard & Poor's said. -- CreditWire
 
 

SOURCE Standard & Poor's
    TOKYO, April 20 /PRNewswire/ -- Standard & Poor's today assigned its
 double-'B'-plus financial strength and long-term counterparty credit ratings
 to Saison Life Insurance Co. Ltd.  The outlook on the long-term rating is
 negative.
     The financial strength rating on Saison Life reflects the insurer's very
 weak operating performance stemming from relatively high surrenders and poor
 efficiency, which are pressuring earnings.  These factors are mitigated by the
 insurer's low-risk asset profile together with the benefits of potential
 access to the clients of its parent, Credit Saison Co. Ltd., a large and
 highly profitable credit card company in Japan.  In addition, Saison Life's
 capitalization is strong, supported by an increased commitment from the
 parent, which recently injected JPY20 billion.  Credit Saison is a member of
 the Saison group, which encompasses more than 130 companies.
     Saison Life is a second-tier life insurer with a 0.2% share of the market
 in terms of premium income in fiscal 1999 (ended March 2000).  A key issue in
 enhancing its market position will be Saison Life's success in implementing
 its strategic plan.  The company's management is focusing on increasing sales
 based on a consulting approach, as well as leveraging the broad base of Saison
 cardholders.  The company's business position has remained weak over the last
 two years as premium income has declined by 7.6% compared with an average
 decline of 5.7% in the Japanese life insurance industry, while surrenders
 continue to be relatively high at 11.6% compared with an industry average of
 10.5%.  Given the increased surrenders at Saison Life after recent
 high-profile failures in the industry, the earnings of Saison Life are likely
 to remain weak in fiscal 2000.  However, Saison Life, as a subsidiary of
 Credit Saison, has good access to the customer base of the Saison group.  The
 insurer is expected to generate new business among these customers in the
 future if the current strategies are successful.
     Saison Life's asset mix is relatively diverse.  The insurer's loan
 portfolio is good with few problem loans.  However, the insurer's investment
 performance was weak in fiscal 1999, mainly due to falling equity prices-the
 insurer has some crossholdings in Saison group companies-and the volatility of
 the euro.  The company's exposure to foreign currency risk remains relatively
 high.
     Saison Life's capital was previously marginal as a result of declining
 business and relatively high exposure to foreign investment markets.  However,
 an injection of JPY20 billion in perpetual subordinated loans from its parent
 strengthened Saison Life's capital significantly.  The insurer's financial
 flexibility is good, based on its nonmutual status as well as an increased
 commitment by Credit Saison to support the company's financial strength, if
 required.
 
     OUTLOOK: NEGATIVE
     The negative outlook reflects the increasing pressure on earnings in the
 Japanese life insurance sector as a whole, amid a challenging operating
 environment. Despite radical restructuring in the last three years, Saison
 Life will not be insulated from this pressure in the short term.  It is likely
 that the insurer will form alliances with other companies in the short-to-mid
 term, although what effect this will have on Saison Life's competitive
 position is not yet clear, Standard & Poor's said. -- CreditWire
 
 SOURCE  Standard & Poor's