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Dai-ichi Life’s Leverage to Stay Below 23% Amid Bond Issuance

by Celia

Fitch Ratings has forecasted that Dai-ichi Life’s financial leverage will remain below 23% by March 2024, with interest coverage expected to remain sufficient. The ratings agency has also maintained a stable outlook for the insurer, citing its strong capitalization and effective management of financial obligations.

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The company is preparing to issue up to $2 billion in US dollar-denominated, step-up callable cumulative perpetual subordinated bonds. The proceeds will fund a subordinated loan to Dai-ichi Life’s holding company. These bonds will come with a call option after 10 years, triggering a 100-basis-point coupon increase at that time.

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Additionally, the bonds feature a mandatory interest deferral clause. This will be activated if Dai-ichi Life’s statutory solvency margin ratio falls below the 200% regulatory threshold or if Japan’s Financial Services Agency issues a corrective action order. As of September 2024, Dai-ichi Life’s solvency margin stood well above the trigger level, at 864% on a non-consolidated basis and 900% on a consolidated basis.

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