Best’s News & Research Service - March 20, 2026 09:34 AM (EDT)
AM Best Affirms Credit Ratings of PanAsia Reinsurance Inc.
- March 20, 2026 09:34 AM (EDT)
//BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of PanAsia Reinsurance Inc. (PanAsia Re) (Hawaii). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect PanAsia Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). The ratings also reflect the implicit and explicit supports received from the parent, Hikari Tsushin, Inc. (Hikari Tsushin).
PanAsia Re’s balance sheet strength reflects its projected risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio (BCAR), which is expected to be at the strongest level for fiscal-year 2025 and beyond for the medium term, supported by sizable capital injection from the parent in mid-2025. The assessment is additionally underpinned by PanAsia Re’s strong capital growth trajectory, low reinsurance dependence and conservative investment portfolio. The company’s capital base has grown significantly over the last five years, expanding 102.9% between fiscal-year 2020 and fiscal-year 2024, driven by internally generated capital from profitable underwriting and capital infusion from the parent.
PanAsia Re’s adequate operating performance assessment is based on its operating profitability with double-digit average returns on equity and favourable combined ratio over the last five years. The company’s small amount and short-term insurance (SASTI) business, which constitutes the majority of its underwriting portfolio, typically has loss ratios below 25%, although it bears relatively high commission expenses payable to its parent. PanAsia Re expects a gradual expansion of its SASTI business, while also exploring non-SASTI opportunities to increase and diversify its premium base with sustainable profitability, although there is some uncertainty regarding the volatility of newer operations facing limited historical experience.
Currently, PanAsia Re operates under a captive license, which allows reinsuring risks from the group companies, as well as selected third-party business upon regulatory approval. The company’s limited business profile assessment reflects its modest business scale, as well as its product lines and geographic concentration writing small personal property damage and health and accident policies mainly emanated from Japan. PanAsia Re has a risk management framework that is largely integrated with its parent.
A negative rating action could occur if PanAsia Re’s risk management framework and capabilities fail to evolve in tandem with its business expansion plan to third-party business. A negative rating action could also arise if there is a material decline in the company’s risk-adjusted capitalization such as from heightened underwriting risk due to aggressive business expansion or an excessive dividend payout to its parent. A further negative rating action could occur if there is significant deterioration in Hikari Tsushin’s credit profile or its willingness to support PanAsia Re.
Although unlikely in the near term, positive rating actions could occur if PanAsia Re demonstrates sustainable improvement in its underwriting and operating profitability for a period of time, while maintaining a robust level of risk-adjusted capitalization and appropriate ERM.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings (BCR), Best’s Performance Assessments (PA), Best’s Preliminary Credit Assessments (PCA) and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.