A.M. Best Affirms Ratings of MS&AD Insurance Group Holdings, Inc.’s Main
Operating and U.S. Subsidiaries
HONG KONG -- May 30, 2014
A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior)
and the issuer credit ratings (ICR) of “aa” of Mitsui Sumitomo Insurance
Company Limited (MSI) (Japan) and Aioi Nissay Dowa Insurance Company Limited
Concurrently, A.M. Best has also affirmed the FSR of A+ (Superior) and the ICR
of “aa” of Mitsui Sumitomo Insurance Company of America (MSIA), Mitsui
Sumitomo Insurance USA Inc. (MSU) and Aioi Nissay Dowa Insurance Company of
America (ADIA). All of these companies are domiciled in New York, NY, are
direct subsidiaries of MSIG Holdings, Inc., and are ultimately owned by MS&AD
Insurance Group Holdings, Inc. (MS&AD), one of the major insurance group
companies based in Japan. The outlook for all ratings is stable.
The ratings of MSI and ADI reflect their solid risk-adjusted capitalization,
improvement in profitability and strong market profile. MSI is the main
operating subsidiary of MS&AD. MSI’s contribution to the group is material in
terms of revenue and earnings. ADI enjoys a strong business profile in its
target markets, which include customers of Toyota Motor Corporation (Toyota)
(Japan) and Nippon Life Insurance Company (Nissay) (Japan). Toyota and Nissay
are the major shareholders of MS&AD and help ADI to access their customers. In
addition, ADI receives comprehensive supports from the parent company, MS&AD.
Since the large natural catastrophe losses incurred in 2011, MSI and ADI has
experienced continuous growth of adjusted capital and surplus. The recovery in
underwriting results and increases in investment return due to favorable
equity markets has led to improvement in operating performance. As a result,
MSI’s risk-adjusted capitalization improved year over year while ADI’s
risk-adjusted capitalization remained adequate to support the current ratings.
Offsetting factors for both companies’ ratings are the exposure to higher
levels of equity investments and its exposure to catastrophe risk. The high
exposure to equity investment could result in volatile results, although both
companies are determined to reduce the strategic stock ownership over the long
term. MSI and ADI are exposed to catastrophe risks, including earthquakes,
tsunamis and typhoons, which could result in substantial claims.
MSI and ADI are well positioned at its current rating level. Downward pressure
of these companies could arise if there is a material decrease in
capitalization because of underwriting operating performance, or a significant
deterioration in the business profile due to a delay in the reorganization
The ratings of MSIA and MSU, which operate under an intercompany pooling
agreement, largely reflect their strong risk-adjusted capitalization,
strategic roles and importance as U.S. domestic insurers within MS&AD and the
benefit of the explicit support provided through internal reinsurance by MSI,
as well as the implied support from MS&AD. Similarly, the ratings of ADIA
largely reflect its strong risk-adjusted capitalization, its role within the
organization and the benefits of implicit support as well as explicit support
provided through a comprehensive reinsurance program by ADI. Most insureds of
ADIA are ADI clients that have operations in the United States.
Given the extent of implied and explicit support embedded in these ratings,
any upward or downward movement on the ratings of MSI and ADI would likely
influence the ratings of MSIA, MSU and ADIA. Any material changes to the
financial condition of MS&AD and/or its commitment in the United States also
could cause these ratings to move. In addition, if MSIA, MSU and ADIA’s
capitalization or operating performance falls markedly short of A.M. Best’s
expectations, negative rating actions could ensue.
Ratings are communicated to rated entities prior to publication, and unless
stated otherwise, the ratings were not amended subsequent to that
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
A.M. Best Asia-Pacific Limited 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.
Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
Seewon Oh, +852-2827-3404
Senior Financial Analyst
Richelle Bryan, +(1) 908-439-2200, ext. 5344
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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