OREANDA-NEWS. August 31, 2015. Fitch Ratings says Mitsui Life Insurance Company Limited's (Mitsui Life: Insurer Financial Strength (IFS) rating BBB+/Stable) rating is likely to benefit from a potential acquisition by Japan's largest private life insurer, Nippon Life Insurance Company (Nippon Life: IFS A/Stable).

Japanese media reported on 26 August 2015 that Nippon Life is in talks with Mitsui Life's shareholders to purchase shares and make Mitsui Life its affiliate. Both Nippon Life and Mitsui Life say nothing has been decided yet. The deal is reported to be worth between JPY300bn and JPY400bn.

The parties could decide by mid-September if they will proceed with the acquisition, media reports say. Once the two companies proceed with the transaction, Fitch will assess the acquisition scheme, including the impact on Nippon Life's consolidated capitalisation, goodwill associated with the purchase, integration plans, and the strategic importance of Mitsui Life within Nippon Life.

Mitsui Life's financial profile is likely to benefit from being part of a larger and financially stronger group.

Currently, Nippon Life's IFS rating is constrained by Japan's Long-Term Issuer Default Rating (A/Stable), given the company's high level of government debt holdings (30% at end-March 2015) and its lack of business diversification outside Japan.

Fitch upgraded Mitsui Life's IFS rating on 26 June 2015 to reflect an improvement in capital adequacy and a turnaround in the sales of the higher-margin medical care products. The rating was affirmed on 3 August 2015.