AM Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “aa+” (Superior) of Tokio Marine & Nichido Fire Insurance Co., Ltd. (TMNF) (Japan) and its subsidiaries. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the U.S. subsidiaries.)

The ratings reflect TMNF’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, very favourable business profile and very strong enterprise risk management (ERM).

TMNF’s balance sheet strength is supported by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company maintains highly conservative financial leverage and strong financial flexibility. While exposed to sizeable equity risk and growing underwriting risks from overseas expansion, it retains substantial capital to absorb potential volatility. The organisation has accelerated its strategic equity disposal programme, targeting full disposal by fiscal-year 2029, which is expected to materially reduce its overall equity risk exposure over the medium term.

TMNF has a track record of consistent premium growth, with net premiums written (NPW) rising to JPY 5.1 trillion in fiscal-year 2024, from JPY 3.4 trillion five years earlier. TMNF also delivered a five-year average return on equity of 10.3% on a consolidated basis, as calculated by AM Best. Its domestic non-life operations reported resilient underwriting results in fiscal-year 2024, with an improved combined ratio, supported by stronger fire insurance profitability and favourable foreign exchange impacts, partially offset by inflationary automobile claims and higher natural catastrophe losses. TMNF’s international operations also delivered solid top-line growth and profits in fiscal- year 2024, with its North American business performing strongly led by Tokio Marine Houston Casualty Group’s record profitability despite capital losses from U.S. commercial real estate loans. TMNF also significantly exceeded its fiscal-year 2024 strategic equity disposal target, with ordinary profit surging to JPY 1,161 billion, benefiting from substantial realised capital gains. AM Best expects that proceeds from the strategic equity disposal programme will provide additional financial flexibility for investments in new business opportunities to further strengthen operating performance over the long term.

TMNF continues to maintain a diversified business profile with operations spanning across different markets and global lines of business, with domestic and overseas businesses contributing approximately 50% of its NPW. In Japan, TMNF maintains leading positions across all major non-life lines, commanding a market share exceeding 25% of NPW. Internationally, the company continues to benefit from a disciplined expansion strategy, with high-quality subsidiaries in North America serving as the cornerstone of its overseas earnings.

The company maintains a sophisticated ERM framework that is embedded throughout its organisation. AM Best believes that TMNF’s risk management capabilities align closely with its highly complex and diverse risk exposures.

Negative rating actions could occur if there is material deterioration in risk-adjusted capitalisation, such as substantial investment losses caused by capital market volatility or large-scale natural catastrophes. Negative rating actions could occur if there is persistent and significant deterioration in TMNF’s operating performance stemming from weak underwriting and investment results. Negative rating actions also could occur if there is significant deterioration in Tokio Marine Holdings, Inc.’s credit profile, including its risk-adjusted capitalisation, financial leverage or interest coverage levels.

Positive rating actions could occur if TMNF demonstrates exceptionally strong and consistent operating performance metrics. However, the likelihood of such actions occurring remains limited at present.

The FSR of A++ (Superior) and the Long-Term ICRs of “aa+” (Superior), have been affirmed with stable outlooks for the following subsidiaries of Tokio Marine & Nichido Fire Insurance Co., Ltd.:

• Tokio Marine America Insurance Company
• Trans Pacific Insurance Company
• TM Specialty Insurance Company
• TNUS Insurance Company

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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