HONG KONG – (COMMERCIAL THREAD) –AM Best revised the outlook from negative to stable and confirmed the financial strength rating of A + (superior) and the long-term issuer credit rating of âaa-â (superior) of Tokio Marine Pacific Insurance Limited (TMPI) ( Guam).
The ratings reflect the strength of TMPI’s balance sheet, which AM Best considers to be very strong, as well as its adequate operational performance, neutral business profile and appropriate management of corporate risks. The ratings also recognize the wide range of implicit and explicit support that TMPI receives from its parent company, Tokio Marine & Nichido Fire Insurance Co., Ltd. (TMNF).
The revised outlook primarily reflects the company’s various initiatives to stabilize its credit fundamentals over the past several years, including capital accumulation, a rate hike exercise for Commercial Accident and Health (A&H) accounts. , the pursuit of a more diversified A&H portfolio, as well as tighter underwriting and pricing discipline in the A&H and P&C segments.
TMPI has a history of positive and stable operating performance, although AM Best expects its underwriting margin to remain relatively low due to the A&H orientation of the company and the competition in the market. TMPI recorded a favorable performance in 2020 and the first half of 2021, mainly due to the decrease in the frequency of medical claims in the context of the COVID-19 pandemic. However, AM Best notes that TMPI’s bottom line will remain subject to external factors over the next several years, such as a potential rebound in medical claims after the pandemic, investment income under pressure in an interest rate environment. low and additional tax obligations.
TMPI’s risk-adjusted capitalization is valued at the highest level, as measured by Best’s capital adequacy ratio (BCAR). Its absolute capital base remains larger than its domestic peers in Guam, thanks to strong capital and surplus growth over the past 10 years, driven by profit retention. The balance sheet is also supported by its very conservative investment strategy and its low reliance on reinsurance.
TMPI is a wholly owned subsidiary of TMNF and its ultimate parent company, Tokio Marine Holdings, Inc., is one of the largest non-life insurance groups in Japan. The company has a strong presence in Guam’s non-life industry, mainly supported by its dominant position in the A&H segment. Despite a significant drop in revenue following the non-renewal of the GovGuam account in 2020 and 2021, the company’s bonus base remained supported by a significant volume of business from its A&H commercial accounts and the health plan for employees. federal employees the company has grown steadily. in recent years for the diversification of activities.
Negative rating actions could arise if TMPI’s risk-adjusted capitalization declines significantly or if there is a significant decline in A&H business volume or the company’s market share to a level that does not take more support the current assessment of the company profile. Negative rating actions may also occur if TMNF support is reduced to an extent that no longer supports the current level of improvement.
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