Fitch Ratings has cut its outlook on 11 Japanese insurers to negative from stable, following a government decision to delay a consumption tax increase.

The ratings agency lowered its country outlook on Japan to negative due to “decreased confidence in the Japanese authorities’ commitment to fiscal consolidation”.

The consumption tax rise was delayed until October 2019 from April next year, extending it further from an original date of October last year.

“In Fitch’s view, only insurers with very good credit quality and sizeable international business diversification can be rated above the sovereign rating if they hold high levels of government debt – that is, more than 20% of their invested base,” the ratings agency says.

The revised outlook applies to Dai-ichi Life, Daido Life, Fukoku Life, Meiji Yasuda Life, Mitsui Life, Mitsui Sumitomo Insurance, Nippon Life, Sompo Japan Nipponkoa, Sumitomo Life and Taiyo Life.

The outlook on Tokio Marine & Nichido Fire Insurance was also downgraded, despite its higher level of international diversification, to ensure the rating is capped at a maximum of one notch above Japan’s sovereign level.

The ratings on all the insurers were affirmed.