Best Affirms Aioi’s ‘A’ Ratings

May 15, 2009

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A’ (Excellent) and the issuer credit rating (ICR) of “a+” of Japan’s Aioi Insurance Company, Limited, both with stable outlooks.

“The ratings reflect Aioi’s stable underwriting performance, adequate capitalization and the planned business alliance among Aioi, Mitsui Sumitomo Insurance Company, Limited and Nissay Dowa General Insurance Company Ltd.,” said Best.

The report also indicated that “although the continuing extreme volatility in the capital markets has negatively impacted Aioi’s capitalization, the company has maintained an adequate level of risk-based capitalization to support the current ratings. The company’s capital and surplus stands at JPY 379 billion [$3.98 billion] as of September 2008, with an additional catastrophe reserve of JPY 249 billion [$2.61 billion].

In addition best noted that “Aioi’s underwriting performance has been stable over the past five years. Excluding fiscal year 2004, the company recorded a combined ratio of below 100 percent using a loss ratio based on incurred/earned basis. Aioi maintained a satisfactory sales volume in various business lines when the overall market was experiencing a negative growth. Aioi has a competitive advantage in the automobile business, along with the growth plan of the “Toyota Market Strategy” in the domestic and overseas markets. A.M. Best believes that the sales momentum for Aioi would continue to be strong with the planned merger with Nissay Dowa General Insurance Company Ltd.

“Partially offsetting these positive rating factors are the high expense ratio relative to other major non-life companies and the depressed economy, which will limit the growth of the non-life industry.

Best also announced that it has affirmed the FSR of ‘A’ (Excellent) and assigned an ICR of “a+” to Aioi Insurance Company of America (Aioi America) (New York, NY). The outlook for each of these ratings is stable. “The rating actions reflect Aioi America’s favorable operating performance and capitalization, and the comprehensive reinsurance program provided by its parent, Aioi,” said Best.

The rating agency also indicated that with the planned merger between Aioi and Nissay Dowa General Insurance Company Ltd, it “expects that the company’s expense ratio will decrease in the medium term and its profitability will improve as it grows larger in size.

Source: A.M. Best –

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