OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Nissan Global Reinsurance, Ltd. (NGRe) (Hamilton, Bermuda). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect NGRe’s strong risk-adjusted capitalization, significantly improved underwriting performance over the past four years and its conservative underwriting strategy. The ratings also consider NGRe’s role as a captive insurer for its parent, Nissan Motor Co., Ltd. (Nissan) [NASDAQ: NSANY], as well as its role within the profitable extended service contract and extended warranty businesses initiated by Nissan. These rating factors are partially offset by the company’s concentration in asset-backed securities (ABS) and its exposure to property-related catastrophes. The company’s sizable investments in ABS account for nearly two times policyholders’ surplus and are composed of the higher-risk automobile loans originated at Nissan’s financing company. These risks are mitigated by diversification and materiality of the underlying loans, as well as the substantial cash flows that are generated and make up a principal source of earnings for NGRe. NGRe’s catastrophe exposure stems from its property and marine cargo coverages written for its affiliates and ceded to wholly owned subsidiary companies.
NGRe is a single-parent captive of Nissan, one of the largest automakers in the world. In its role as a single-parent captive, NGRe provides Nissan with a host of insurance coverages in the United States and abroad.
Coverages at the NGRe level or at wholly owned subsidiary companies include global property, global marine transport, global product and general liability, workers’ compensation, and a global platform for extended service contract and extended warranty business. As a member of the Nissan family of companies, NGRe benefits from the group’s proprietary data warehouse, extensive risk management practices and loss control programs.
The company’s rating outlooks could see positive movement if the company’s operating performance continues to improve, stabilize and benefit from favorable reserve position, and strong investment returns while its risk-adjusted capital position remains favorable. The ratings could be impacted negatively if the company’s risk-adjusted capitalization and operating performance are impacted by deterioration in its underwriting performance or losses relating to its sizable ABS portfolio. The ratings could be impacted negatively by deterioration in its parent’s financial or market position, which limits the need for insurance or leads to excessive dividend demands.
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 Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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