Australia’s life insurance market remains highly attractive for Japanese buyers, Fitch Ratings says in a report on Dai-ichi’s purchase of the Suncorp life business.

The ratings agency says the Suncorp deal will increase Dai-ichi’s earnings growth over the medium term and broaden its global diversification.

Australia’s population is growing steadily, unlike in Japan and western Europe.

“The Australian market is one of the biggest developed life insurance markets in Asia-Pacific ex-Japan, with a sound infrastructure and regulatory regime,” Fitch says. “Acquisitions would provide attractive geographical and business diversification for… Japanese insurers.”

Dai-ichi became a major player in the Australian market after the acquisition of TAL, previously Tower, in 2011. Other Japanese companies making investments include Nippon Life, which bought NAB’s MLC life business two years ago.

Fitch says the Dai-ichi deal is unlikely to have a material impact on Suncorp Group’s credit profile, because the life business contributes less than 10% of total premium income and consolidated profit.

S&P Global ratings has affirmed its “A” financial strength and issuer credit ratings on Suncorp Life and Superannuation.

It says the deal is likely to “incrementally strengthen” Suncorp Group’s credit profile because the life business is a higher-risk entity and provides a low earnings contribution.