Best Upgrades DTRIC Rating to ‘A-‘

January 30, 2004

A.M. Best Co. announced that it has upgraded the financial strength rating to “A-” (Excellent) from “B+” (Very Good) of Honolulu-based DTRIC Insurance Company Limited with a stable outlook.

“The company’s capital position is supported by its parent via an explicit net worth guarantee,” said Best. “As a member of the Aioi Insurance Group–which is one of the five-largest insurance groups in Japan–DTRIC benefits not only from the financial support but also business support from the group. Toyota Motor Corporation is Aioi Insurance Company Limited’s majority shareholder; DTRIC collaborates with Aioi Insurance on marketing strategies integrating DTRIC’s personal auto line of business with the sale of Toyota vehicles.”

The bulletin noted a distinct improvement in the company’s operating efficiency as one factor supporting the upgrade. DTRIC posted a lower expense ratio in fiscal year 2002, at least partially attributable to the establishment of a direct marketing call center in early 2001. “The call center effectively enhanced the company’s marketing capabilities for personal lines of business while considerably reducing back office expenses,” said Best.

“Partially offsetting these positive factors are the increasing underwriting leverage and adverse effect from the loss experience of the workers’ compensation line,” the rating agency continued. “While the company has started to employ more stringent pricing and loss control in this line of business, and while improvement is expected in the future, the company’s loss ratio is still at a high level as of fiscal year 2002. “

It also noted that “The rapid expansion of its net premiums has led to the continuous increase in the company’s underwriting leverage. As the company’s risk-adjusted capital can be eroded from this increase in the leverage, A.M. Best will remain cautious about the rapid expansion of the company’s business.”

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