Standard & Poor's Corp. said Friday its outlook for Japanese life insurers remains negative, as their earnings reports released earlier this week indicate continued business contraction, a severe environment of ultra-low interest rates and a weak stock market.
Life insurers will probably continue to cut expenses, reduce risk assets in their investment portfolios and shift to more profitable business areas, but the near-term benefits of such efforts will be limited due to the shrinking business and severe domestic investment environments, the U.S. credit-rating agency said.
"We expect the gap between Japanese life insurance companies to widen, with most players experiencing some weakening in their credit quality, and we do not rule out the possibility of additional failures in 2002," said Tatsuro Kurogi, a credit analyst at S&P in Tokyo. "Continued flight to quality among increasingly credit-savvy policyholders may also precipitate the exit of marginal players from the market and lead to further consolidation."