A.M. Best has assigned a financial strength rating (FSR) of A (Excellent) and a long-term issuer credit rating (long-term ICR) of “a+” to The Toa 21st Century Reinsurance Company (TTFC).
Additionally, the Toa Reinsurance Company (Toa Re) and The Toa Reinsurance Company of America (TRA) had their FSR of A (Excellent) and long-term ICRs of “a+” affirmed.
The outlook for all these ratings is stable.
TTFC is a new member of Toa Re, of which TRA is the other member.
Toa Re’s ratings reflect the company’s consolidated balance sheet strength, categorised as strongest, in addition to its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The balance sheet strength is assessed at the strongest level, due to its conservative risk management in its underwriting and investment strategies.
Stable and positive operating results have caused a significant improvement in Toa Re’s risk-adjusted capitalisation in the past five years.
The company maintained its profitable underwriting results in the 2017 fiscal year, despite a series of catastrophe events in North America.
As a Japan-based reinsurer, offsetting rating factors include limited growth opportunities in Japan’s domestic reinsurance market and intense competition in the global reinsurance market, owing to abundant capacity.
A substantial decline in risk-adjusted capitalisation resulting from significant underwriting losses, or adverse movements in the financial markets could cause negative rating actions.
Since 2002, TTFC has been a wholly owned reinsurance subsidiary of Toa Re that mainly assumed captive business from its parent.
In May 2018, it was announced that TTFC will underwrite third-party business under the brand name of Toa Re Europe.
Additionally, the company will strengthen its experienced underwriting team by adding other reinsurance professionals locally to TTFC and will serve as the group’s major European underwriting platform.
Toa Re will gradually transfer part of its existing European book of business to TTFC.
According to A.M. Best, TTFC’s addition to Toa Re’s rating unit reflects its strategic importance to Toa Re’s growth and geographic diversification strategy.
Toa Re provides TTFC with a variety of explicit and implicit support, such as business transfer, risk management and operational support.
The rating’s agency views Toa Re as “strongly committed to TTFC’s development and long-term success and will provide financial support if needed”.