A.M. Best Affirms Ratings of The Fuji Fire & Marine Insurance Company, Limited and AIU Insurance Company, Ltd
HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A (Excellent) and issuer credit ratings of “a” of The Fuji Fire & Marine Insurance Company, Limited (Fuji Fire) (Japan) and AIU Insurance Company, Ltd. (AIU) (Japan). The ultimate parent company is American International Group, Inc. (AIG) (New York, New York, USA). The outlook for all ratings is stable.
Fuji Fire's ratings reflect its adequate risk-adjusted capitalization and improvement in its profitability. The company reported an improvement in its operating performance in the first half of fiscal year 2013, driven by the recovery in its auto underwriting results.
AIU’s ratings reflect its distinctive presence in the Japanese market as a significant provider of accident and health insurance (A&H) and the expected improvement in its profitability. AIU’s underwriting results are expected to improve in the midterm, driven by a restructuring in its reinsurance arrangements.
AIU’s retention remained at approximately 22% over the past five years ending in 2013, with a significant portion of risk ceded to AIG’s affiliates. The small base of net premium income under J-GAPP resulted in weak profitability and high volatility in its operating ratio in that five-year period.
Fuji Fire and AIU’s ratings consider the support from their parent company, AIG Japan Holdings KK, ultimately owned by AIG, in the areas of cross-selling opportunities with its group companies, risk management and strategic initiatives for business integration. In the second half of 2015, Fuji Fire is scheduled to merge with AIG, subject to regulatory approval. The companies’ operating performance is expected to improve in the midterm, as they accelerate their integration by sharing infrastructure and implementing group-wide initiatives.
The companies are well positioned at their current rating level. Negative rating actions could occur if there is a significant worsening of their operating results and a substantial deterioration in their risk-adjusted capitalization. Any unfavorable rating actions on AIG could also put downward pressure on the companies’ ratings.
The methodology used in determining these interactive 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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This rating announcement has been issued by A.M. Best Asia-Pacific Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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