NN Life Insurance Co. Ltd.

The positive outlook on NN Life Japan reflects outlooks on the core subsidiaries of NN Group. It also incorporates our view that NN Life Japan will remain a strategically important subsidiary of NN Group. We may consider revising the outlook to stable in the coming two years in either of the following scenarios: We revise to stable our outlooks on NN Group's core subsidiaries; or We revise down the SACP for NN Life Japan. We may also consider a downgrade if we revise down our assessment of NN Life Japan's group status to moderately strategic from strategically important, although the likelihood of this happening is low. We may consider an upgrade in the coming two years if both the following

...NN Life Japan is likely to maintain adequate competitiveness in Japan's life insurance market despite challenges such as governance and business concentration, in our view. Japan-based NN Life Insurance Co. Ltd. (NN Life Japan) received a business improvement order from Japan's Financial Services Agency (FSA) because of inappropriate development and solicitation tied to overemphasizing tax-saving benefits of its insurance products. In response, the insurer has been taking measures to improve governance, such as reviewing its sales system and strengthening its risk management system. We, based on this, predict the insurer's sales of new policies will fall for the time being. In addition, we view the insurer's concentration on COLI business to be one of its challenges. Meanwhile, we think its strengths, including a flexible business strategy, high ROE, and support from its parent group, NN Group, a Dutch insurance giant, are likely to continue to make up for its weaknesses. In our base-case...

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