MOODY’S Ratings and Fitch Ratings have upgraded Singapore Life Holdings (Singlife Holdings) and its core operating unit Singapore Life (Singlife) on the issuer’s stable outlook after the completion of its acquisition by Japanese life insurer Sumitomo Life on Mar 18.
Moody’s on Tuesday (Mar 26) upgraded Singlife Holdings’ issuer rating to Baa1 from Baa2, and the insurer’s subordinated notes rating to Baa2 from Baa3. It also upgraded Singlife’s insurance financial strength rating to A2 from A3.
Similarly, Fitch upgraded Singlife Holdings’ issuer default rating to A from BBB+, and its subordinated long-term securities rating to BBB+ from BBB-. The agency also upgraded Singlife’s insurer financial strength rating to A+ from A-, and its issuer default rating to A from BBB+.
Both Moody’s and Fitch highlighted Singlife’s strategic importance to Sumitomo Life, with Moody’s incorporating a one-notch and Fitch a two-notch uplift to the Singapore insurer’s credit profile.
Moody’s said: “The upgrade of Singlife’s ratings reflects the benefit from Sumitomo Life to Singlife because of the former’s stronger credit profile in terms of market position, capital resources and financial flexibility”.
The rating agency expects Singlife to maintain its “solid” capitalisation over the next 12 to 18 months. It also foresees no significant change to the insurer’s business and financial strategies following the full ownership by Sumitomo Life, which will continue providing support to the company.
Sumitomo Life has been Singlife’s strategic investor since 2019. It entered into an agreement with Aviva Group to acquire its 25.9 per cent stake in Singlife last September, and subsequently raised its stake with a S$180 million investment, before moving on to acquire the remaining shares in the home-grown insurer last December.
Fitch noted that Singlife Holdings is “very important” to its Japanese parent. It is the only wholly owned life insurance unit of Sumitomo Life in South-east Asia, a region with faster growth than the mature Japanese life insurance market.
“We believe Sumitomo Life will continue to seek opportunities for bolt-on acquisitions in South-east Asia through Singlife Holdings as its operating platform,” the rating agency added.
Fitch also values the “strong” capital position of Singlife Holdings, whose consolidated regulatory risk-based capital ratio was 226 per cent as at end-June 2023.
Both rating agencies expect Singlife Holdings’ profitability to improve gradually.
Fitch expects the company to focus on value-added protection products under the IFRS 17 accounting standard, while Moody’s said that the improvement in its underlying profitability would be backed by profitable in-force book and reduction in financing expenses.
