Standard & Poor's said Monday it has downgraded its insurer financial strength and counterparty credit ratings for Kyoei Life Insurance Co. from B-plus to B.
The U.S. credit rating agency cited the company's pressured earnings, unsolved asset-quality issues and weak capitalization as reasons for the downgrade.
The Japanese life insurer currently holds 32.5 billion yen in subordinated debt from the recently collapsed Dai-Ichi Mutual Fire & Marine Insurance Co., whose failure has negatively affected Kyoei's planned restructuring.
The recent announcement by Prudential Insurance Co. of America that it will invest up to $300 million in Kyoei Life will improve the insurer's capitalization but the improvement will only be modest.
S&P also said it removed Kyoei Life's ratings from CreditWatch, with negative implications, where they were placed in May.
According to the agency, improvement in the company's financial position depends entirely on successful implementation of the management's strategy to strengthen its business profile amid increasing competition resulting from deregulation and the challenges of Japan's still sluggish economy.