AM BEST AFFIRMS CREDIT RATINGS OF TOKIO MARINE PACIFIC INSURANCE LIMITED
HONG KONG, Oct 21 (Bernama-BUSINESS WIRE) -- AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” (Superior) of Tokio Marine Pacific Insurance Limited (TMPI) (Guam). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect TMPI’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also acknowledge the wide range of implicit and explicit support that TMPI receives from Tokio Marine & Nichido Fire Insurance Company, Limited (TMNF), which is the main insurance operating entity of Tokio Marine Holdings, Inc. (TMH).
AM Best assesses TMPI’s risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Although increased dividend payouts in recent years led to a slowdown in its capital growth, AM Best expects the company’s risk-adjusted capitalisation to remain comfortably at the strongest level over the medium term. The balance sheet strength assessment also considers its highly conservative investment strategy and low reinsurance dependency.
TMPI has a historical track record of generally positive and stable operating performance, although its underwriting margin remains thin due to its focus on the accident and health (A&H) segment and market competition. The company reported favourable earnings in 2020 and 2021, driven by declined medical and auto claims amid the COVID-19 pandemic and various underwriting initiatives. However, its underwriting margin showed a deterioration during the first half of 2022 as medical claims rebounded after the pandemic, coupled with its re-entry to the Guam government health plan (GovGuam) for the 2022 renewal term. Although AM Best expects that the company’s successful rate hikes for the A&H line of business throughout 2022 can help to stabilise its loss ratio over the coming periods, AM Best also notes potential pressure from ongoing medical inflation and further normalisation of the auto loss ratio to pre-COVID level.
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