HONG KONG, May 29 (Bernama-BUSINESS WIRE) -- A.M. Best has downgraded the Financial Strength Rating to A (Excellent) from A+ (Superior) and the Long-Term Issuer Credit Rating to “a+” from “aa-” of The Toa Reinsurance Company, Limited (Toa Re) (Japan) and its subsidiary, The Toa Reinsurance Company of America (TRA) (headquartered in Morristown, NJ). The outlook of these Credit Ratings (ratings) is stable.
The rating downgrades reflect a business profile that is not comparable to similarly rated peers, which are large global reinsurance companies. Although Toa Re has a strong relationship with the major cedants in Japan, which also are its major shareholders, the company’s profile in the global reinsurance market is not strong enough to support the current ratings. Moreover, the company is faced with weak growth prospects in its domestic market. Toa Re maintains strong risk-adjusted capitalization, owing to improved profitability in recent years and conservative risk management. The company has improved its business diversification through its life/health reinsurance segments and overseas reinsurance segments over the past five years, which has helped stabilize its performance and support overall business position. Also, Toa Re has tightly controlled risk exposures – catastrophe risks in particular – during this period, which was demonstrated by the stability of recent results despite the impact from the Kumamoto earthquake and the Fort McMurray wildfire in 2016. A partially offsetting rating factor is Toa Re’s volatile performance track record. Although performance improved in 2016, the company’s weak growth outlook in its domestic market and the sustained intense competition in the overseas reinsurance market will put pressure on performance. mrem.bernama.com/viewsm.php?idm=29243
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