A.M. Best Upgrades Rating for Yasuda Fire and Marine Insurance Company of America.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--June 29, 2001 A.M. Best Co. has upgraded the financial strength rating for The Yasuda Fire and Marine Insurance Company of America (Yasuda America), New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , from A (Excellent) to A+ (Superior). The company has been assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. a financial size category of VII. The rating reflects Yasuda America's excellent capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. , historically profitable operations as well as the demonstrated financial support and commitment of its parent, The Yasuda Fire and Marine Insurance Company Limited, the second largest non-life insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. in Japan. Additionally, the rating recognizes the decisive actions Yasuda America's management recently took to improve underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. results, which deteriorated sharply in 2000. Yasuda America's capitalization is solid as evidenced by its conservative premium and net leverage ratios of 1.0 times and 3.5 times surplus, respectively, at year-end 2000. In addition, financial flexibility is greatly enhanced by a strongly capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. parent. In 2000, Yasuda America reported a combined ratio of 131, well above its average combined ratio of 110 for the five-year period of 1995-1999. Factors contributing to Yasuda America's poor underwriting performance in 2000 included the aggressive expansion of its domestic--non Japanese-related--business in late 1998 and 1999 in a fiercely competitive commercial lines environment. The emergence of a significant number of large claim losses, increased frequency of claims in its short-haul trucking book, inadequately priced California workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. business and higher retention limits for the majority of its writings were also factors. Accordingly, management has recently implemented substantive corrective actions A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or . Those actions include holding profit centers more accountable for the quality of business produced; raising premium rates substantially where appropriate; not renewing unprofitable accounts; terminating unprofitable agencies; strengthening internal audit procedures; and upgrading management information systems. Furthermore, Yasuda America is beginning to cede the writings of a number of its unprofitable Japanese-related accounts to its parent until they are deemed as acceptable to retain. Yasuda America is adjusting its insurance mix, reducing its sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. writings in workers'
compensation and auto lines, while emphasizing property and package
business.
Offsetting these positive rating factors is Yasuda America's above-average exposure in workers' compensation and commercial automobile lines where loss costs appear to be rising at a particularly high rate. A.M. Best believes it will need to further strengthen loss reserves in 2001 given the relatively short period claims have had to emerge on recently increased writings and the rising trend in the frequency and severity of these claims. A.M. Best estimates Yasuda America's underwriting results will remain depressed in 2001 and strongly believes Yasuda Japan will provide the necessary financial support and assistance for Yasuda America to effectively compete in the U.S. marketplace and to continue to proactively underwrite To insure; to sell an issue of stocks and bonds or to guarantee the purchase of unsold stocks and bonds after a public issue. The word underwrite has two meanings. and service its core Japanese clients. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion