|[December 12, 2012]
A.M. Best Affirms Ratings of Tokio Millennium Re Ltd.
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating of A++
(Superior) and issuer credit rating of "aa+" of Tokio Millennium Re
Ltd. (TMR) (Bermuda). The outlook for both ratings is stable.
TMR is a wholly owned subsidiary of Tokio Marine & Nichido Fire
Insurance Co., Ltd. (TMNF), which is the main trading subsidiary of Tokio
Marine Holdings, Inc. (Tokio Marine Group). Both companies are
domiciled in Tokyo, Japan.
The ratings reflect TMR's superior financial strength, favorable
operating performance over the last several years and its prudent risk
management practices. In addition, the ratings are enhanced by the
implicit and explicit support provided by TMNF. The ratings also
consider TMR's strategic importance to Tokio Marine Group's initiatives
to geographically diversify its catastrophe risks as well as enhance its
enterprise risk management function.
Tokio Marine Group has unified its global reinsurance brand under TMR
over the past few years. TMR benefits from the global recognition and
balance sheet strength of TMNF. TMR predominately writes property
catastrophe and specialty reinsurance and has been slowly expanding into
casualty reinsurance since mid-2011 to diversify its book of business.
TMR continues to be a leader in transforming and transferring
reinsurance risk to the capital markets, through its new entities Shima
Re and Tokio Solution Management.
TMR has a scientific and quantitative focus and looks to take on risk
that it can identify with and model with a hgh degree of comfort.
Property catastrophe modeling is done by utilizing both commercial
models and proprietary models. This multi- model allows TMR to be more
competitive or selective on risks. TMR also maintains a conservative
Partially offsetting these positive rating factors is TMR's exposure to
low frequency, high severity catastrophic events, as evidenced by the
New Zealand earthquakes. These losses significantly impacted TMR's
financial performance in 2011; however, the company remains well
capitalized and well positioned to take advantage of improving property
catastrophe rates in the global marketplace.
Positive rating actions may result over the next several years if TMR
exhibits consistency in annual earnings and retained earnings growth,
higher surplus levels and/or further strategic integration from TMNF.
Negative rating actions could occur if the company's operating
performance is consistently below the market by a significant margin
over the next several years, and/or there is capital deterioration due
to poor investment performance.
A.M. Best remains the leading rating agency of alternative risk transfer
entities, with more than 200 such vehicles rated in the United States
and throughout the world.
For current Best's Ratings and independent data on the captive and
alternative insurance market, please visit www.ambest.com/captive.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a
comprehensive explanation of A.M. Best's rating process and contains the
different rating criteria employed in the rating process. Key criteria
utilized include: "Risk Management and the Rating Process for Insurance
Companies"; "Understanding BCAR for Property/Casualty Insurers"; "Rating
Members of Insurance Groups"; "Evaluating Country Risk"; "Catastrophe
Analysis in A.M. Best Ratings"; and "A.M. Best's Perspective on
Operating Leverage." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS
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