Fitch has maintained Nippon Life’s insurer financial strength and long-term issuer default ratings at A, while keeping the outlook at negative.

It has kept the rating one notch below Japan’s sovereign rating of A+, due to the large amount of government debt (32% of the total) in Nippon Life’s assets.

The rating is based on Nippon Life’s status before it completed the purchase of 80% of MLC earlier this month.

“The affirmation of the rating reflects Nippon Life’s very strong business profile in Japan,” Fitch says. “This was further underpinned by management integration of Mitsui Life last year, sufficient capital, low financial leverage (10% at end March) and stable profit margin.”

Fitch believes Nippon Life will maintain sufficient capitalisation, backed by foundation funds, issue of subordinated debts and sustainable retained earnings.

But the business is not immune to the low interest rate environment, which is affecting all global insurers.

Fitch expects profits to remain stable over the next few years, underpinned by substantial mortality and morbidity margins from its seasoned life insurance portfolio.

It says Nippon Life is unlikely to be upgraded in the near future.