HONG KONG--(BUSINESS WIRE)-- A.M. Best has commented that the financial strength rating (FSR) of A++ (Superior) and the issuer credit rating (ICR) of “aa+” of Tokio Marine & Nichido Fire Insurance Co., Ltd. (TMNF) remain unchanged following its announced acquisition of HCC Insurance Holdings, Inc. (HCC Holdings) [NYSE: HCC].

The rating commentary follows the June 10 announcement by Tokio Marine Holdings, Inc. (TMHD) that TMNF, a wholly owned subsidiary of the group, has entered a definitive agreement to acquire a 100% stake in HCC Holdings. The acquisition price is USD 78.00 per share in cash totaling USD 7.5 billion. The transaction is expected to close in the fourth quarter of calendar year 2015, subject to the required regulatory approvals.

TMNF is the main operating company in the group in terms of contribution to both revenue and earnings and is the core company to implement overseas expansion strategies as evidenced with the large-scale acquisitions in the overseas markets over the past years.

Although A.M. Best sees an intermediate term impact to the risk-adjusted capitalization associated with this merger’s size in terms of goodwill, it is expected that this combination of the two strong companies will have an enhanced scale in the global market and a more diversified profile with the earnings capability to improve risk-adjusted capitalization.

A.M. Best will continue to monitor the financial position of the consolidated group after the completion of the acquisition. Any material changes to the financial profile will be reviewed to assess its impact on the financial strength of the group.

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:

• Catastrophe Analysis in A.M. Best Ratings
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding BCAR for Canadian Property/Casualty Insurers
• Understanding Universal BCAR

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.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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Source: A.M. Best