A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of Sony Life Insurance Company Ltd. (Sony Life). The outlook for the company is stable.

The company says that the rating reflects Sony Life's strong risk-adjusted capitalisation, high growth momentum and superior distribution capabilities. On a risk-adjusted basis, Sony Life is one of the most strongly capitalised life insurers in Japan, according to A.M. Best. The company's local solvency ratio stood at 1,453.3% at the end of fiscal year 2003, and the Best's Capital Adequacy Ratio (BCAR), which measures capitalisation on a risk-adjusted basis, also demonstrated the company's strong capital position.

While the Japanese life insurance industry shows years of contractions in premium income as well as in in-force business, Sony Life's premium grew by a five-year average compounded growth rate of 8.6% between fiscal years 1999 and 2003. At the same time, the company's lapse and surrender ratio remained low and stable, reflecting its capability in effectively serving its customers.

Sony Life's strengths are partially offset by the ongoing challenge of reducing the negative margin spread in its insurance portfolio and the dividend requirement by its ultimate parent company, Sony Corporation, says A.M. Best.