A.M. Best Affirms Ratings of Tokio Marine & Nichido Fire Insurance Company Limited.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A++ (Superior) and the issuer credit rating of "aa+" of Tokio Marine & Nichido Fire Insurance Company Limited (TMNF TMNF Trackmania Nations Forever TMNF Tokio Marine Nichido Fire TMNF Tree-Marking Normal Form TMNF Telecommunication Management Network Forum TMNF Trackmania Nations Finland ) (Japan). The outlook for both ratings is stable. The ratings reflect TMNF's strong risk-adjusted capitalization, strengthened distribution channels and diversified income sources. The ratings also reflect the company's comprehensive reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. scheme. TMNF is the market leader in the Japanese non-life insurance industry with dominant market share of approximately 25% as of fiscal year 2005. The company demonstrated a superior capitalization level with strong risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. (BCAR BCAR Brunswick County Association of Realtors BCAR British Civil Airworthiness Requirements BCAR Bullitt County Animal Rescue (Shepherdsville, KY) BCAR Business Case Analysis Report BCAR Beaver Creek Array BCAR Buffalo Civic Auto Ramps, Inc. ). The company's local solvency margin has consistently stood at over 1,000% over the past five years, except fiscal year 2004. A.M. Best believes that the company's capitalization will remain strong over the next three years. To cope with the potential challenges in the midst Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?" midmost of the market deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. in Japan, TMNF deployed numerous ways to strengthen its distribution networks. The company plans to utilize the newly established Financial Sales Promotion department (joint sales and marketing functions of life and non-life businesses) to provide one-stop shopping services for its customers. In addition, the acquisition of Nisshin Fire and Marine Insurance Company by Millea Group is also expected to strengthen the company's retail business distribution networks. Millea Group is active in diversifying its revenue sources, not only expanding in the domestic non-life insurance market but also diversifying its profit sources through the domestic life and global insurance markets. TMNF has been aggressively expanding in overseas markets in recent years through mergers and acquisitions. A.M. Best believes that this is a positive initiative in diversifying its earnings sources from the matured Japanese non-life market if TMNF can translate the increased revenue into additional profits. TMNF's catastrophe exposure is sufficiently covered by its catastrophe reserves and reinsurance scheme. The company's catastrophe reserves are enough to cover its total probable maximum loss Probable Maximum Loss (PML) The anticipated value of the largest loss that could result from the destruction and the loss of use of property, given the normal functioning of protective features (firewalls, sprinklers, and a responsive fire department, among others, in the (PML PML - Parallel ML. ["Synchronous Operations as First-Class Values", J.H. Reppy <jhr@research.att.com>, Proc SIGPLAN 88 Conf Prog Lang Design and Impl, June 1988, pp. 250-259]. ) exposure as of fiscal year 2005. Partially offsetting these positive rating factors are the possible adverse impact on TMNF's market profile due to the Financial Services Agency's (FSA FSA Financial Services Authority FSA Food Standards Agency (UK) FSA Farm Service Agency (USDA) FSA Financial Services Agency (Japan) ) business suspension order and potential instability of capitalization level. TMNF received a three-month business suspension order from the FSA regarding its non-payment claims of the third sector products in March 2007. The failure to pay insurance claims reveals the potential flaws inherent in the company's corporate governance and compliance systems, which might potentially hurt its market profile as the industry leader. As of fiscal year 2005, TMNF's equity investments accounted for approximately 44% of its total assets. This high equity exposure could expose the company to potential instability of its capitalization level. Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com. |
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