AM Best Affirms Credit Ratings of Tokio Marine Pacific Insurance Limited


HONG KONG–()–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.

TMPI is a wholly owned subsidiary of Tokio Marine North America and ultimately owned by TMH, one of Japan’s largest non-life insurance groups. The company has a strong presence in Guam’s non-life industry, underpinned by its dominant position in the A&H segment. Despite a notable reduction in its premium base following the non-renewal of the GovGuam account in 2020 and 2021, the company’s premium base remained supported by a large volume of business from its commercial A&H accounts and a federal employee health plan, which the company has grown steadily over the past years for business diversification.

The company receives a wide range of implicit and explicit support from the group in terms of brand recognition, managerial expertise, operations, capital and reinsurance.

Negative rating actions could occur if there is sustained and significant deterioration in TMPI’s operating performance. Negative rating actions also could occur if its risk-adjusted capitalisation declines significantly, for example, due to continued weak profit retention while capital requirements increase materially, or if support from TMNF is reduced to an extent that no longer supports the current level of enhancement.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.



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