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Tao Re A+ financial strength rating affirmed


September 18, 2006   by Canadian Underwriter


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A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and the issuer credit rating of “aa-” of The Toa Reinsurance Company, Ltd.
The ratings agency says Tao’s ratings, which both have a negative outlook, reflect the reinsurers “strengthened capitalization, solid presence in the Japanese market and sound asset portfolio. “
“Toa Re has a solid market presence as the only domestic professional reinsurer in Japan and a preferred status with its Japanese non-life insurance clients, which are also its shareholders,” according to A.M. Best.
The solid market presence, coupled with the sound asset portfolio, has contributed to a
Tao’s stable underwriting and investment income is supported by its “solid market presence” and asset portfolio, A.M. Best reports. “Toa Re’s investment operation contributed to its profit, whereas the underwriting profitability weakened its overall earnings in comparison to its peers,” according to A.M. Best.
A.M. Best says the consistently low net premium leverage in the range of 0.4 times and 0.6 times provides bolster the reinsurers capital position.
The negative outlook assigned by A.M. Best reflects the continued weak underwriting profitability and increased market competition in Asia.
A.M. Best says it recognizes the strengthened capitalization of Toa Re following the reduction of asset risk but explains that the continuing weak underwriting profitability has undermined the competitiveness of the company to its peers.
“It is anticipated that a sound capitalization combined with strong earnings are sustainable factors in the current reinsurance market,” A.M. Best forecasts.