Japanese life insurers will continue their overseas expansion, “driven by a saturated domestic market”, Fitch says.

“The four major life insurance groups have already started to acquire large insurers in the US, UK and/or Australia,” the ratings agency says.

In the past six months Dai-ichi Life has acquired Protective Life (US) for ¥575 billion ($6.6 billion); Meiji Yasuda Life bought Stancorp Life (US) for ¥625 billion ($7.2 billion); Sumitomo Life acquired Symetra Financial (US) for ¥467 billion ($5.4 billion); and Nippon Life bought Mitsui Life (Japan) for ¥280 billion ($3.2 billion) and MLC (Australia) for ¥204 billion ($2.3 billion).

“These developed markets will provide significant premiums and earnings immediately after the acquisitions,” Fitch says. “Their markets are mature, similar to Japan, but their growing population will provide moderate growth for Japanese insurers.”

Japanese life insurers’ earnings will be stable next year, with foreign bonds keeping investment returns positive, the report says.

However, an appreciating yen would upset this prediction.

Fitch sees demand for mortality and morbidity-related products as resilient, mainly because sales focus on the moderately growing and more profitable health sector.

And it says Japanese life insurers’ expansion into healthcare insurance products amid an ageing population will deliver good profits.

“Annualised inforce premiums from the third sector had increased by 1.5% in the first half of the financial year ending 2017,” the report says.

Meanwhile, Fitch has confirmed Dai-ichi Life’s financial strength rating at A+ with a negative outlook, and its long-term issuer default rating at A with a stable outlook.