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FOR IMMEDIATE RELEASE
HONG KONG - JUNE 09, 2015 12:36 PM (EDT)
A.M. Best has affirmed the financial strength rating of A+ (Superior) and the issuer credit ratings of "aa-" of The Toa Reinsurance Company Limited (Toa Re) (Japan) and its subsidiary, The Toa Reinsurance Company of America (TRA) (headquartered in Morristown, NJ). The outlook for all ratings is stable.
The ratings reflect Toa Re's solid risk-adjusted capitalization, improvement in profitability and its strong business profile in Japan. Toa Re maintains solid risk-based capitalization that is supportive of the company's risk. The company has continued to adjust its business mix toward non-catastrophe risks in order to build a stable earnings profile. As a sole domestic reinsurance company in Japan, Toa Re maintains strong relationships with major ceding companies in Japan, as well as with (re)insurance companies in the Asia-Pacific region, which enables the company to secure stable growth in its business amid softening market conditions.
Offsetting rating factors are historical volatility in Toa Re's profitability and increasingly competitive reinsurance market conditions. The company reported high volatility in earnings and capitalization in the past five years due to large catastrophe losses and relatively high exposure to equity investments.
Toa Re is well-positioned at its current rating level. Downward pressure could arise if there is a material decrease in capitalization due to a significant deterioration in underwriting performance caused by a large catastrophe event or substantial investment losses due to an adverse change in financial market.
The ratings of U.S.-based TRA are aligned with its ultimate parent, Toa Re, and reflect the company's strategic importance as an operating subsidiary of Toa Re. TRA has a well-established position within the U.S. regional markets, solid customer relationships, a strong risk-adjusted capital position, a well-diversified book of business and a continued focus on underwriting performance. The U.S. operation has grown to represent a significant portion of premiums and operating income for the organization and provides Toa Re with an opportunity for strategic international expansion and portfolio diversification. At the same time, TRA benefits from the global presence and financial strength of Toa Re.
The methodology used in determining these interactive ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology .
Key insurance criteria reports utilized:
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best's Ratings & Criteria Center.
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