OREANDA-NEWS. Fitch Ratings has today downgraded the Insurer Financial Strength (IFS) ratings of nine Japanese insurance companies and two US insurance companies by one notch. The Outlook on these ratings is Stable. All ratings have been removed from Rating Watch Negative.

The rating actions follow the downgrade of the Japan's Long-Term Local Currency Issuer Default Rating (IDR) to 'A' from 'A+' (see "Fitch Downgrades Japan to 'A'; Outlook Stable" dated 27 April 2015 at www.fitchratings.com). These insurers are rated at or above Japan's Long-Term Local Currency IDR.

The nine Japanese insurers are: The Dai-ichi Life Insurance Company, Limited (Dai-ichi Life), Daido Life Insurance Company (Daido Life), Meiji Yasuda Life Insurance Company (Meiji Yasuda Life), Mitsui Sumitomo Insurance Company, Limited (MSI), Nippon Life Insurance Company (Nippon Life), Sompo Japan Nipponkoa Insurance, Inc. (Sompo Japan Nipponkoa), Sumitomo Life Insurance Company (Sumitomo Life), Taiyo Life Insurance Company (Taiyo Life), and Tokio Marine & Nichido Fire Insurance Co., Ltd. (TMNF). The two US insurance companies are the operating entities of Aflac, Inc. (Aflac) and Dai-ichi Life's US subsidiary Protective Life Corporation (PL).

A full list of rating actions is provided at the end of this commentary.

KEY RATING DRIVERS

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 assets). Fitch would consider insurance groups that generate 20% or more of their net premiums from international business sources on a sustained basis as having sizeable international business diversification.

Fitch maintains its view that TMNF and Aflac's operating subsidiaries out of the 11 insurers under review have achieved the necessary international business diversification that counterbalances their heavy Japanese government debt holdings. This would allow the ratings on these two insurers to be up to one notch higher than the sovereign rating.

The IFS ratings on TMNF and Aflac's core operating subsidiaries have been downgraded to 'A+' from 'AA-'. The ratings are one notch higher than Japan's IDR, and the Outlook on both ratings is Stable.

The other eight Japanese insurers that have high levels of Japanese government debt have not achieved the necessary level of international business diversification and Fitch will not allow them to be rated above the sovereign. Their IFS ratings have been downgraded to 'A' from 'A+' and the Outlook on all the ratings is Stable.

The sovereign constraint was applied only to those ratings that were previously at a level above the defined constraint of Japan's current Long-Term Local-Currency IDR (as a result, eight Japanese insurers and the PL subsidiaries have been downgraded to 'A', and TMNF and the Aflac operating subsidiaries downgraded to 'A+'). Any ratings that were previously at or below the constraint were affirmed. This has resulted in compressed notching between the IFS, IDR and/or debt ratings in some cases. Should the sovereign rating be upgraded in the future, and the constraints relieved, Fitch would expect to return to standard notching at that time.

RATING SENSITIVITIES

With the insurers currently rated at or above Japan's Long-Term Local-Currency IDR, an upgrade of any of the insurers is unlikely in the near future.

Conversely, if the rating on Japan were lowered, the ratings on the insurers are also likely to be lowered.

See previously released commentary on the various insurance companies at www.fitchratings.com for a discussion of additional ratings sensitivities.

FULL LIST OF RATING ACTIONS

The Dai-ichi Life Insurance Company, Limited
-IFS Rating downgraded to 'A' from 'A+'; Outlook Stable
-Long-Term IDR affirmed at 'A'; Outlook Stable
-USD1.3bn cumulative perpetual subordinated notes affirmed at 'BBB+'
-USD1bn cumulative perpetual subordinated notes affirmed at 'BBB+'

Daido Life Insurance Co.
-IFS Rating downgraded to 'A' from 'A+'; Outlook Stable

Meiji Yasuda Life Insurance Company
-IFS Rating downgraded to 'A' from 'A+'; Outlook Stable

Mitsui Sumitomo Insurance Company, Limited
-IFS Rating downgraded to 'A' from 'A+'; Outlook Stable
-Long-Term IDR downgraded to 'A' from 'A+'; Outlook Stable
-USD1.3bn subordinated notes due 2072 affirmed at 'A-'

Nippon Life Insurance Company
-IFS Rating downgraded to 'A' from 'A+'; Outlook Stable
- Long-Term IDR affirmed at 'A'; Outlook Stable
-USD2bn subordinated notes due 2042 affirmed at 'BBB+'
-USD2.25bn subordinated notes due 2044 affirmed at 'BBB+'

Sompo Japan Nipponkoa Insurance Inc.
-IFS Rating downgraded to 'A' from 'A+'; Outlook Stable
-Long-Term IDR downgraded to 'A' from 'A+'; Outlook Stable
-USD1.4bn subordinated notes due 2073 affirmed at 'A-'

Sumitomo Life Insurance Company
-IFS Rating downgraded to 'A' from 'A+'; Outlook Stable
- Long-Term IDR affirmed at 'A'; Outlook Stable
-USD1bn subordinated notes due 2073 affirmed at 'BBB+'

Taiyo Life Insurance Company
-IFS Rating downgraded to 'A' from 'A+'; Outlook Stable

Tokio Marine & Nichido Fire Insurance Co., Ltd.
-IFS Rating downgraded to 'A+' from 'AA-'; Outlook Stable

Aflac, Inc.
- Long-Term IDR affirmed at 'A'; Outlook Stable
-2.4% USD550m senior notes due 2020 affirmed at 'A-'
-3.25% USD450m senior notes due 2025 affirmed at 'A-'
-3.625% USD750m senior notes due November 2024 affirmed at 'A-'
-3.625% USD700m senior notes due June 2023 affirmed at 'A-'
-2.26% Uridashi notes due September 2016 affirmed at 'A-'
-1.84% Samurai notes due July 2016 affirmed at 'A-'
-6.9% USD400m senior notes due 17 December 2039 affirmed at 'A-'
-3.45% USD300m senior notes due 15 August 2015 affirmed at 'A-'
-6.45% USD450m senior notes due 15 August 2040 affirmed at 'A-'
-2.65% USD650m senior notes due 15 February 2017 affirmed at 'A-'
-4% USD350m senior notes due 15 February 2022 affirmed at 'A-'
-5.5% USD500m junior subordinated debentures due 15 September 2052 affirmed at 'BBB'

American Family Life Assurance Co. of Columbus
American Family Life Assurance Co. of New York
Aflac Japan
-IFS Rating downgraded to 'A+' from 'AA-'; Outlook Stable

Protective Life Corporation
- Long-Term IDR affirmed at 'A-'; Outlook Stable
-USD150m 6.40% senior notes due 2018 affirmed at 'BBB+'
-USD400m 7.38% senior notes due 2019 affirmed at 'BBB+'
-USD300m 8.45% senior notes due 2039 affirmed at 'BBB+'
-USD288m 6.25% subordinated debt due 2042 affirmed at 'BBB-'
-USD150m 6.00% subordinated debt due 2042 affirmed at 'BBB-'

Protective Life Insurance Company
Protective Life and Annuity Insurance Company
West Coast Life Insurance Company
MONY Life Insurance Co.
-IFS Rating downgraded to 'A' from 'A+'; Outlook Stable.