Ratings agency’s good news about Tokio Millennium Re Ltd.

Posted by on Oct 19, 2010 in Local News & Alerts | 0 comments

By BusinessWire

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.

TMR remains strategically important to Tokio Marine Group’s initiatives to geographically diversify the group’s aggregation of natural perils, help enhance enterprise risk management and establish a stable portfolio.

TMR benefits from the global recognition and balance sheet strength of TMNF.

TMR predominately writes property catastrophe and specialty reinsurance and also specializes as a writer of transformer business.

The ratings reflect TMR’s superior financial strength, favorable operating performance over the last several years and its prudent risk management practices.

The rating also takes into consideration the historical implicit and explicit support provided by TMNF.

The company has a scientific and quantitative focus and looks to take on risk that it can understand and model with a high degree of comfort.

TMR maintains a very conservative investment portfolio, in part, to position itself for strong risk-taking capacity from an underwriting perspective.

Partially offsetting these positive rating factors is TMR’s exposure to low frequency, high severity catastrophic events, which could dampen profitability and/or inflict large losses on the company.

However, TMR’s low operating leverage as a result of its prudent risk posture substantially mitigates this risk, and the company continues to expand into different lines of business in order to stabilize its profitability.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology — Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed.

Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; and “Rating Members of Insurance Groups.” Methodologies can be found at www.ambest.com/ratings/methodology.

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