A.M. Best Upgrades Ratings of NIPPONKOA Insurance Company Ltd
Carole Lovell |
Additionally,
The rating upgrades reflect NIPPONKOA’s solid risk-capitalization, the expected benefits from its merger with
NIPPONKOA is expected to maintain its solid risk-capitalization in the mid term owing to its efforts to reduce the stock holdings, which are in line with the group’s initiatives. Also, the company should benefit from its business integration with Sompo Japan as this could strengthen NIPPONKOA’s market presence. NIPPONKOA’s profitability also is expected to improve going forward, given the reduction in its cost base through the merger and the recovery in its underwriting profitability.
Offsetting ratings factors include a decrease in the absolute amount of NIPPONKOA’s risk-adjusted capital and surplus, its large exposure to catastrophe risks and high exposure to stock market volatility. NIPPONKOA’s adjusted capital and surplus declined 11% to
Downward rating pressure could arise if there is an adverse impact to NIPPONKOA’s risk-adjusted capitalization due to a material deterioration in its operating performance and/or large-scale occurrences of catastrophe events.
The rating affirmations for NIPPONKOA Asia reflect its excellent risk-adjusted capitalization and stable underwriting performance. The ratings also recognize the ongoing support the company receives from NIPPONKOA in the areas of business generation, operations and reinsurance. Parental support contributes essentially to NIPPONKOA Asia’s niche position as a
Partially offsetting these positive rating factors is the competitive general insurance market condition in
While the outlook for the above ratings is stable, potential negative rating triggers could occur if NIPPONKOA Asia’s risk-adjusted capitalization and/or operating performance significantly deteriorate.
The rating affirmations for NIPPONKOA China acknowledge its strong risk-adjusted capitalization and improving operating performance. The ratings also consider the full support NIPPONKOA China receives from NIPPONKOA in the areas of management, business development and reinsurance.
NIPPONKOA China’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is well positioned to support its projected business growth over the medium term. The company’s operating loss was narrowed to
Partially offsetting these positive factors is NIPPONKOA China’s continued underwriting loss due to its high expense ratio during its early stage of operation and the
While positive rating actions are unlikely in the near term, negative rating actions may occur if NIPPONKOA China’s risk-adjusted capitalization exhibits significant adverse deviation from A.M. Best’s expectation and if the company fails to execute its business plan or meet the planned underwriting performance.
The methodology used in determining these 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. Key criteria utilized include: “Understanding Universal BCAR”; “Rating Members of Insurance Groups”; “Assessing Country Risk”; “Catastrophe Analysis in A.M. Best Ratings”; “Risk Management and the Rating Process for Insurance Companies”; “Rating New Company Formations”; and “Evaluating Country Risk.” Best’s Credit Rating Methodology can be found at http://www.ambest.com/ratings/methodology.
Copyright: | (c) 2012 A.M. Best Company, Inc. |
Source: | A.M. Best Company, Inc. |
Wordcount: | 818 |
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