Meiji Yasuda Life Insurance’s acquisition of Legal & General America (LGA) is set to bolster the insurer’s credit profile and global diversification, according to Fitch Ratings.
The deal, valued at $3.3 billion, involves the purchase of LGA as a wholly owned subsidiary, along with a 5% stake in its parent company, Legal & General Group Plc. Fitch predicts that the acquisition will increase Meiji Yasuda Life’s consolidated core profits by approximately $59 million (¥9 billion) annually.
For the financial year ending March 2024, Meiji Yasuda Life reported a consolidated core profit of $3.87 billion (¥561 billion). Following the completion of the acquisition, the company expects the contribution of its overseas core profits to rise to 18%, up from the current 16%.
Despite the sizeable transaction, the impact on Meiji Yasuda Life’s capital adequacy and financial leverage is expected to be minimal. The company’s consolidated net assets totaled ¥5.8 trillion ($40.02 trillion) as of March 2024, with cash and cash equivalents amounting to ¥1.1 trillion ($7.59 trillion), making the acquisition cost manageable.
Fitch anticipates a slight decrease in the company’s economic solvency ratio, which stood at 215% at the end of September 2024, due to the acquisition.
The purchase is also expected to strengthen Meiji Yasuda Life’s position in the growing U.S. individual life insurance and pension risk transfer markets.
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