Standard & Poor's has upgraded the outlook on Japan and with it six of the nation's leading insurers.
The New York-based ratings agency said that improved economic prospects in the island nation prompted the more favorable outlook on sovereign ratings.
Among the factors that have contributed are the restructuring of the private sector, the turnaround in the banking sector through the resolution of bad loan problems, and elimination of deflationary pressure, S&P found.
"This environment will support the stabilization and eventual reduction of the general government debt burden," the report said, revising the outlook on Japan's long-term sovereignty ratings to positive from stable.
The elimination of deflationary pressure has prompted an up tick in domestic demand with the end result that the economy is growing faster than it has in the past ten years. Also, the yen's key international currency position has provided the government with ample external liquidity and good access to global markets, the report stated.
"Japan has a highly skilled workforce and is a global leader in the manufacturing sector, particularly autos and electronics," according to S&P.
But on the downside, S&P said the sovereignty ratings remained constrained by large fiscal deficits and outstanding debt, as well as uncertainty over the impact of possible rising interest rates. In addition, the change in leadership in the ruling Liberal Democratic Party set for September is another factor that was seen as leading to possible instability.
However, S&P said at this point the entire nation is on the rebound and the insurance industry is bound to follow.
The following six companies had their outlooks revised to positive from stable: Tokio Marine & Nichido Fire Insurance Co. Ltd., Tokio Marine & Nichido Life Insurance Co. Ltd., Mitsui Sumitomo Insurance Co. Ltd., Mitsui Sumitomo Kirameki Life Insruance Co. Ltd., AXA Life Insurance Company and MassMutual Life Insruance Company.
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