21-D-1414
March 9, 2022

Japan Credit Rating Agency, Ltd. (JCR) announces the following credit rating.

Asahi Mutual Life Insurance Company (security code: -)<Outlook Change>
Long-term Issuer Rating:
Outlook:
Ability to Pay Insurance Claims:
Outlook:

BBB+
from Stable to Positive
BBB+
from Stable to Positive<Affirmation>
Bonds (Dated subordinated bonds):

BBB-

Rationale(1) Asahi Mutual Life Insurance Company (the “Company”) is Japan’s second oldest time-honored life
insurance company. In April 2021, the Company newly established Nanairo Life Insurance Co., Ltd.
(“Nanairo Life”), which operates agency business. Although the Company’s business size is rather
small in terms of in-force policies, etc., it strives to differentiate itself from other insurers byconcentrating its management resources to the individual insurance area to focus on the markets forseniors, women and others. JCR evaluates issuer rating of the Company as Asahi Mutual Life Group,
which includes Nanairo Life and other companies, and reflects certain business foundations, solid
contract performance, sound asset quality, and a reasonable level of capital adequacy etc. in theratings. JCR has revised its issuer rating outlook from Stable to Positive. Although the Company has
been affected by a considerably stressful external environment, such as the persistently low interest
rate environment and the sales restrictions imposed by the COVID-19 pandemic, it flexibly responds
to the sales structure revision, etc., and its policy sales have been steady. Its economic value-based
profitability is high and the pace of improvement in the balance between risk and capital is fast. The
Company has been steadily reducing its interest rate exposure and it will continue to do so. JCR
believes that reducing the sensitivity of economic value-based indicators through risk reduction will
have a positive effect on the Company's ratings.
(2) In response to diversifying customer needs, the Company mainly offers third-sector products such as
medical care and nursing care/dementia. While having sales representatives as the main sales
channel, it has been diversifying and specializing sales channels by defining the sales agency
channel as a growth driver, which includes independent insurance agents and telemarketing. The
Company has invested its limited management resources to channels with growth potential, and it isyeilding positive outcome in terms of policy performance and others. Despite the fact, many life
insurance companies have entered the nursing care insurance market, where the Company excels,and competition is intense. Therefore, the key factor will be whether the Company can maintain its
superiority in the market or not.
(3) Restrictions on face-to-face sales under the COVID-19 pandemic forced the Company to devise a
new sales style, but the impact on policy performance was generally limited. Payment of insurance
claims and benefits associated with the pandemic are also considerably low. The policy performancebased on the annualized premium on new policies fell in the first quarter of the fiscal year ended
March 2021 (FY2020), but it picked up subsequently and remained at the same level as the previous
fiscal year for full year. Currently, it has secured the pre-pandemic level. In addition to positive
outcome of increased sales staff and revision of the sales staff backup system, JCR views utilizationof contactless tools including on-line meeting is also working positively. Nevertheless, effectivenessof utilizing contactless tools in developing new customers, etc. are not fully known; therefore,
establishment of new sales styles need to be observed from a medium-term perspective.

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Copyright © Japan Credit Rating Agency, Ltd. All Rights Reserved.

(4) Although the Company maintains the core profit at a certain level backed by large mortality andmorbidity gains; however, it has a heavy burden of negative spread as it has many policies in force
with high assumed interest rate. The amount of negative spread has been decreasing at a certain
pace and is expected to shrink gradually over the time, but the earnings structure still needs to be
improved. Meanwhile, the economic value-based way of thinking has been widely accepted in the
Company as indicated by the introduction of EV-based operating indicators from early on. As theCompany has been focusing on third-sector products, their ratios in in-force policies and new policies
are high compared to other companies, and profitability measured by the economic value is relativelyhigh.
(5) Core equity capital has been on the increase due to the accumulation of retained earnings including
recording various reserves. The quality of capital is improving steadily, which JCR has previously
regarded as the priority challenge facing the Company that would contribute to raising its
creditworthiness, such as issuing yen-denominated hybrid bonds. Solvency margin ratio as ofDecember 31, 2021 was at a sufficient level standing at 980%. The Company also conducts economic
value-based assessment internally, and capital adequacy against risks is decent for a company in
JCR’s “BBB” rating category. Although the Company is exposed to interest rate risk due to theduration gaps between assets and liabilities, it is making progress in reducing them through theaccumulation of super-long-term bonds, changes in the liability structure and others. Despite the fact,
the Company has more room for improving capital adequacy compared to other life insurancecompanies in higher rating categories given that sensitivity of the economic value-based indicators
are slightly large and interest payments associated with the capital procurement are not small. The
Company has been practicing the concept of control of the balance between risk and return as
indicated that it has established an integrated control system of earnings and capital based on risk
management through developing the ERM framework and using economic value-based assessmentin the management strategies and others. In light of changes in the environment, flexible responses
to product strategies and asset management policy are required. Therefore, significance of ERM is
increasing.
Tomohiro Miyao, Kota Matsuzawa

RatingIssuer: Asahi Mutual Life Insurance Company<Outlook Change>
Long-term Issuer Rating:
BBB+
Ability to Pay Insurance Claims: BBB+

Outlook: Positive
Outlook: Positive<Affirmation>

Issue
Amount (bn)Issue Date
Due Date
CouponRating
1st Series Deferrable Interest and Callable Unsecured Subordinated Bonds (Private Placement)
JPY 15
Feb. 10, 2022
Feb. 10, 2057
(Note)BBB(Note): 1.50% per annum for the interest payment dates falling between the following day of issue dateand February 10, 2027. 5-year JGB interest rates on February 10, 2027 and on the reference
date of every five years + 2.50% from the next day of February 10, 2027.

Rating Assignment Date: March 4, 2022
The assumptions for the credit ratings and the definitions of the rating symbols are published as "Types of Credit Ratings and Definitionsof Rating Symbols" (January 6, 2014) in Information about JCR Ratings on JCR's website (https://www.jcr.co.jp/en/).
Outline of the rating methodology is shown as "JCR's Rating Methodology" (November 7, 2014), "Life Insurance" (July 1, 2013),"Ratings of Hybrid Securities" (September 10, 2012), and "Rating Methodology for Financial Institutions' Capital and TLAC
Instruments" (April 27, 2017) in Information about JCR Ratings on JCR's website (https://www.jcr.co.jp/en/).

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026
Information herein has been obtained by JCR from the issuers and other sources believed to be accurate and reliable. However, because of the possibility of human or mechanical error as well as other factors,
JCR makes no representation or warranty, express or implied, as to accuracy, results, adequacy, timeliness, completeness or merchantability, or fitness for any particular purpose, with respect to any suchinformation, and is not responsible for any errors or omissions, or for results obtained from the use of such information. Under no circumstances will JCR be liable for any special, indirect, incidental orconsequential damages of any kind caused by the use of any such information, including but not limited to, lost opportunity or lost money, whether in contract, tort, strict liability or otherwise, and whether
such damages are foreseeable or unforeseeable. JCR's ratings and credit assessments are statements of JCR's current and comprehensive opinion regarding redemption possibility, etc. of financial obligations
assumed by the issuers or financial products, and not statements of opinion regarding any risk other than credit risk, such as market liquidity risk or price fluctuation risk. JCR's ratings and credit assessments
are statements of opinion, and not statements of fact as to credit risk decisions or recommendations regarding decisions to purchase, sell or hold any securities such as individual bonds or commercial paper.
The ratings and credit assessments may be changed, suspended or withdrawn as a result of changes in or unavailability of information as well as other factors. JCR receives a rating fee paid by issuers for
conducting rating services in principle. JCR retains all rights pertaining to this document, including JCR's rating data. Any reproduction, adaptation, alteration, etc. of this document, including such rating
data, is prohibited, whether or not wholly or partly, without prior consent of JCR.
JCR is registered as a "Nationally Recognized Statistical Rating Organization" with the U.S. Securities and Exchange Commission with respect to the following four classes. (1) Financial institutions, brokers
and dealers, (2) Insurance Companies, (3) Corporate Issuers, (4) Issuers of government securities, municipal securities and foreign government securities.
JCR publishes its press releases regarding the rating actions both in Japanese and in English on the same day. In case that it takes time to translate rating rationale, JCR may publicize the summary version,
which will be replaced by the full translated version within three business days. (Regarding Structured Finance products, JCR only publicize the summary version in English.)

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Copyright © Japan Credit Rating Agency, Ltd. All Rights Reserved.

I n f o r m at i o n D i s c l o s u r e F o r mJapan Credit Rating Agency, Ltd.

Disclosure Required by Paragraph (a)(1)(ii) of Rule 17g-7

1

Issuer:Asahi Mutual Life Insurance Company

Rating Publication
Date:

March 9, 2022

The Symbol, Number, or Score in the Rating Scale used to Denote Credit Rating Categories andNotches and, the Identity of the Obligor or the Identity and a Description of the Security or Money
Market Instrument as Required by Paragraph (a)(1)(ii)(A) of Rule 17g-7
Please see the news release. If the credit rating is a private rating, please see the report for private
rating.

2

The version of the procedure or methodology used to determine the credit rating; as Required by
Paragraph (a)(1)(ii)(B) of Rule 17g-7
Please see the news release. If the credit rating is a private rating, please see the report for private
rating.

3

The Main Assumptions and Principles used in Constructing the Procedures and Methodologies
used to Determine the Credit Rating as Required by Paragraph (a)(1)(ii)(C) of Rule 17g-7
The credit rating methodology assumes, in principle, to be applied to assess the likelihood of agiven debt payment in light of its issuer’s condition and business environment, etc. in the relevant
future. There is certain limitation, however, in the time horizon that the rating foresees.
The credit rating methodology assumes, in principle, that the factors posted in the below areparticularly important for such likelihood to be determined, and that the rating determination ismade by evaluating each of them not only quantitatively but also employing qualitative analyses.

A) Business Bases
The likelihood of a given debt payment is highly conditional to its issuer’s business bases - how they
can be maintained/ expanded into the future and thereby secure earnings and cash flows in adequacy
and in a sustainable way.
B) Financial Grounds and Asset Quality
The likelihood of debt payment is highly dependent on the degree of the issuer’s indebtedness and loss
absorption capacity in terms of equity capital. Also notable is that a financial institution might see asignificant loss of financial grounds as a result of changes in value of the assets under its possession.
C) Liquidity Positions
The likelihood of debt payment is highly dependent on the adequacy of the issuer’s cash and othersources of repayment (liquidity positions).

1/5D) Related Parties’ Status and Stance of Support/ Assistance for the Issuer
The likelihood of debt payment is affected one way or the other by the issuer’s related parties such as
parent company, subsidiary, guarantor, and the government of the issuer’s business domicile, etc. - bytheir own conditions and/ or position of support/ assistance for the issuer.
E) Order of Seniority in Debt Payment
The likelihood of debt payment can be different between given debts of the same issuer. The
likelihood of debt payment for an individual debt is dependent on the issuer’s discretion, and/ or its
rank relative to other debts of the same issuer in the order of seniority in principal/ interest payment
which is determined by design as financial product or by laws, etc.

4

The Potential Limitations of the Credit Rating as Required by Paragraph (a)(1)(ii)(D) of Rule 17g-7
The credit rating herewith presented by JCR is its summary opinion with regard to the likelihood ofgiven debt payment and hence not necessarily a perfect representation of such likelihood. The credit
rating is not intended to estimate the probability of default or the loss on given default, either.
The objective of the credit rating herewith presented does not include any concerns other than thelikelihood of debt payment, such as risks of price changes, market liquidity, etc.
The credit rating herewith presented is necessary to be reviewed along with possible changes of theissuer of rated objects in its business performance and/ or circumstances which include regulatoryenvironment, and hence subject to possible alteration.

5

Information on the Uncertainty of the Credit Rating as Required by Paragraph (a)(1)(ii)(E) of Rule
17g-7
The information used for the determination of credit rating as herewith presented is obtained by
JCR from the issuer of rated objects and other sources that JCR trusts in terms of accuracy andreliability but possibly contains errors due to human, non-human or other causes. Consequently, thecredit rating determined on the grounds of such information does not constitute, explicitly or
implicitly, any representation or warrant of JCR on the information itself or any consequences of its
use in terms of accuracy, relevance, timeliness, wholeness, market value, or usefulness for any
specific purposes.

6

Use of Due Diligence Services of a Third Party in Taking the Rating Action as Required by Paragraph(a)(1)(ii)(F) of Rule 17g-7
There is no use of any third-party due diligence service in the determination of the credit ratingherewith presented.

7

Use of Servicer or Remittance Reports to Conduct Surveillance of the Credit Rating Required by
Paragraph (a)(1)(ii)(G) of Rule 17g-7
There is no use of any servicer or remittance report to conduct surveillance of the credit ratingherewith presented.

8

The Types of Data Relied Upon for the Purpose of Determining the Credit Rating as Required by
Paragraph (a)(1)(ii)(H) of Rule17g-7

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The information posted in the below, which includes data, is used for the determination of the credit
rating herewith presented.
A) Audited financial statements presented by the rating stakeholders
B) Explanations of business performance, management plans, etc. presented by the rating stakeholders

9Overall assessment of the Quality of Information Available and Considered in Determining theCredit Rating as Required by Paragraph (a)(1)(ii)(l) of Rule 17g-7
JCR holds its basic policies for securing the quality of information as a base of due diligence for thedetermination of credit ratings. The information used as a base for the determination of credit ratingherewith presented satisfies such policies, which include the audit by an independent auditor, thewarranty made by the issuer, the publication by the issuer, some independent media or, otherwise,
JCR analyst’s scrutiny, etc.
JCR sees no particular weakness in the quality of information used for the determination of thecredit rating herewith presented as compared to the information used in other cases of the credit
rating for comparable issuers or ratable objects.
If the credit rating is an Indication, please see the report for Indication.

10 Information Relating to Conflicts of Interest as Required by Paragraph (a)(1)(ii)(J) of Rule 17g-7
JCR receives payment of compensation for the determination of the credit rating herewith presented
from either one of those parties who are issuer, underwriter, depositor or sponsor.
JCR received in the last fiscal year in the past payment of compensation from the same party forany kind of JCR’s service other than the determination of public or private credit rating, such as one
in the ancillary business.

or Measure of the Potential Volatility of the Credit Rating as Required by Paragraph
11 Explanation(a)(1)(ii)(K) of Rule 17g-7
A) Business Bases
The credit rating is subject to alteration if there is improvement or deterioration of the issuer’s
business bases, since its revenue, etc. may improve or deteriorate by the change in its business
management policies, clients’ preferences, competitive situation, or a technological innovation. The
resultant alteration of the credit rating is usually by a notch, with possibility of a few notches if andwhen the change in the business bases is large.
B) Financial Grounds and Asset Quality
The credit rating is subject to alteration if the issuer increases/ decreases its debt/ capital or vice versa
and thereby makes its individual debt payment liability less or more bearable and its loss absorption
capacity into the future decreased or increased. Also, the changes in the quality of asset under theissuer’s holding may affect the credit rating, since such changes could raise or lower the likelihood of
future loss of the issuer’s financial grounds. The resultant alteration of the credit rating is usually by anotch, with possibility of a few notches if and when the change in the financial grounds and/ or asset
quality is large.
C) Liquidity Positions
The credit rating is subject to alteration if there is a change in the issuer’s financial management
policy or in the relations with fund procurement sources and the change thereby makes its liquidity
positions improve or deteriorate. The resultant alteration of the credit rating is usually by a notch, withpossibility of a few notches if and when the change is large.

3/5D) Related Parties’ Status and Stance of Support/ Assistance for the Issuer
The credit rating is subject to alteration if there is a change in the issuer’s parent company or
subsidiary, guarantor or other provider of credit enhancement, or the government of the issuer’s
business domicile, or other related parties’ own conditions and/ or position of support/ assistance forthe issuer, and the change thereby makes its business bases, financial grounds and/ or liquidity
positions improve or deteriorate, and/ or making the effectiveness of guarantee and other credit
enhancement improve or deteriorate. The resultant alteration of the credit rating is usually a notch,with possibility of a few notches if and when the change is large.
E) Order of Seniority in Debt Payment and Non-Payment Forgiven by Contract
The credit rating is subject to alteration if there is a change in the rated debt’s status in the order ofseniority relative to other debts caused by the improvement/ deterioration of the issuer’s financial
condition. The resultant alteration of the credit rating is usually a notch, with possibility of a few
notches if and when the change is large. Also, in case of the financial products for which non-payment
of interest/ principal is contractually permissible, the credit rating is subject to alteration if and when
the likelihood of such non-payment is projected to increase or decrease. The resultant alteration of thecredit rating could be by a notch but often as much as a few notches.
F) Rise and Fall in General Economy and Markets
The credit rating is subject to alteration if there is a rise/ fall in the general economy and/ or themarkets inducing the issuer’s revenues/ expenses to increase/ decrease and vice versa, etc. The
resultant alteration of the credit rating is usually by a notch, with possibility of a few notches if andwhen the change is exceptionally large.
G) Various Events
The credit rating is subject to alteration on occurrence of various events, such as change in the issuer’s
major shareholders, M&A and other organizational change, accident, violation of the law, litigation,legal/ regulatory change, natural disaster, etc., which are unforeseeable at the time when the credit
rating is determined, causing a significant change on the issuer’s business bases, financial grounds, etc.
The resultant alteration of the credit rating could be by a notch but more often than not as much as afew notches.

12

Information on the Content of the Credit Rating, Including the Historical Performance of the Credit
Rating and the Expected Probability of Default and the Expected Loss in the Event of Default as
Required by Paragraph (a)(1)(ii)(L) of Rule 17g-7
Historical records of the credit rating herewith presented are posted in the end of this paper.
The credit rating herewith presented by JCR is its summary opinion with regard to the likelihood ofgiven debt payment and hence not necessarily a perfect representation of such likelihood. The credit
rating is not intended to estimate the probability of default or the loss on given default, either.
Facts of the probability of default are posted as Form NRSRO Exhibit 1 on the JCR website under
the URL:
https://www.jcr.co.jp/en/service/company/regu/nrsro/on the Sensitivity of the Credit Rating to Assumptions Made as Required by Paragraph
13 Information(a)(1)(ii)(M) of Rule 17g-7
A) Business Bases
The credit rating herewith presented could be changed if and when the assumptions made at the timeof its determination turn out to be inaccurate with regard to the issuer’s business bases and powers ofearning or cash flow generation, etc. The resultant change of the credit rating is most likely by a notch,
as JCR speculates, but possibly as much as a few notches if the development is rapid in improvement
or deterioration of the issuer’s business bases on some drastic change in the operational environments,
etc.
B) Financial Grounds and Asset Quality
The credit rating herewith presented could be changed if and when the assumptions made at the timeof its determination turn out to be inaccurate with regard to the issuer’s financial grounds and asset
4/5

quality. The resultant change of the credit rating is most likely by a notch, as JCR speculates, but
possibly as much as a few notches if the development is rapid in improvement or deterioration of theissuer’s financial grounds and/ or asset quality on some drastic change in its business bases.

C) Liquidity Risks
The credit rating herewith presented could be changed if and when the assumptions made at the timeof its determination turn out to be inaccurate with regard to the issuer’s liquidity positions. The
resultant change of the credit rating is most likely by a notch, as JCR speculates, but possibly as muchas a few notches if the development is rapid in improvement or deterioration of the issuer’s liquidity
positions on some drastic change in its financial management policy or relations with fundprocurement sources, etc.
D) Related Parties’ Status and Stance of Support/ Assistance for the Issuer
The credit rating herewith presented could be changed if and when the assumptions made at the timeof its determination turn out to be inaccurate with regard to the issuer’s parent company or subsidiaries,
guarantor or other providers of credit enhancement, the government of the issuer’s business domicile
or other related parties’ status and stance of support/ assistance for the issuer. The resultant change ofthe credit rating is most likely by a notch, as JCR speculates, but possibly as much as a few notches if
there is a major change on the part of related parties, such as replacement, disappearance, some drastic
improvement/ deterioration of financial grounds/ balances, etc.
E) Order of Seniority in Debt Payment and Non-Payment Forgiven by Contract
The credit rating herewith presented could be changed if and when the assumptions made at the timeof its determination turn out to be inaccurate with regard to the order of seniority in repayment ofinterests and principal. JCR assumes the resultant change of the credit rating is most likely by a notch.
The change could be as much as a few notches if the issuer’s financial structure differs so much andthereby the balance between debts shifted so greatly. Rating change is also possible in case of thefinancial products for which non-payment of interest/ principal is contractually permissible, if andwhen the assumptions made at the time of its determination turns out to be inaccurate. The change ofthe credit rating is assumed to be by a notch but often as much as a few notches.
on the Representations, Warranties, and Enforcement Mechanisms of an Asset14 Information
backed Security as Required by Paragraph (a)(1)(ii)(N) of rule 17g-7
The credit rating herewith presented is not for an ABS product, and hence no relevant issue.

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026

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The Historical Performance of the Credit Rating
Issuer Name

Asahi Mutual Life Insurance
Company
Asahi Mutual Life Insurance
Company
Asahi Mutual Life Insurance
Company
Asahi Mutual Life Insurance
Company
Asahi Mutual Life Insurance
Company
Asahi Mutual Life Insurance
Company
Asahi Mutual Life Insurance
Company

Issue Name

Publication Date

RatingOutlook/Direction

Issuer(Long-term)

December 19, 2018

BBB-

StableIssuer(Long-term)

February 12, 2020

BBB

Positive

Issuer(Long-term)

March 4, 2021

BBB+

StableAbility to Pay Insurance Claims

December 19, 2018

BBB-

StableAbility to Pay Insurance Claims

February 12, 2020

BBB

Positive

Ability to Pay Insurance Claims

March 4, 2021

BBB+

StableFebruary 4, 2022

BBB-

Bonds no.1(subordinated)

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Attachment

Attestation Required by Paragraph (a)(1)(iii) of Rule 17g-7

I, Shozo Matsumura, have responsibility to this Rating Action and to the best of my knowledge:

A) No part of the credit rating was influenced by any other business activities.
B) The credit rating was based solely upon the merits of the obligor, security, or money market
instrument being rated.
C) The credit rating was an independent evaluation of the credit risk of the obligor, security, or
money market instrument.

Shozo Matsumura
General Manager of Financial Institution Rating Department

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026