Ratings agency A.M. Best has kept faith with Japan-based insurance giant Tokio Marine & Nichido Fire Insurance (TMNF), as it retained the firm’s financial strength rating of A++ (Superior) and the Long-Term Issuer Credit Rating of “AA+”. It also assigned a “stable” outlook to these ratings.

The ratings reflect the insurer’s strong risk-adjusted capitalization, track record of profitable operating performance, and favorable business profile, A.M. Best said. The ratings agency said a rise in the firm’s adjusted capital and surplus strengthened its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio.

“Operating performance remains very profitable, supported by strong improvement in underwriting results, which partially offset a decline in net investment income,” it added. TMNF’s profit generation and future growth is also supported by its “extensive and increasing overseas presence, especially in developed markets”.

A.M. Best warned that TMNF’s exposure to catastrophe risks and its “high proportion” of equity investments partially offset the positive ratings. It said these could bring volatility to the firm’s capital and surplus. “However, the company actively manages these risks in its enterprise risk management framework.”

It also warned that negative rating actions could occur if there is a material decline in TMNF’s risk-adjusted capitalization due to either a consistent deterioration in the company’s operating performance or a negative impact from large-scale catastrophe events.


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