S&P Puts Kyoei on CreditWatch After Cancellation of Plan to Join Millea

Standard & Poor’s reacted quickly to the announcement by Japan’s Kyoei Mutual Fire & Marine Insurance Co. that it had canceled plans to join the Millea Group, and would instead become a subsidiary of the National Mutual Insurance Federation of Agricultural Cooperatives.

The rating agency announced that it had placed its triple-’B'-minus insurer financial strength and long-term counterparty credit ratings on Kyoei “on CreditWatch with developing implications.”

The Millea Group was formed by the union of Tokio Marine and Fire Insurance Co. and Nichido Fire & Marine Insurance Co., both double ‘A’ rated companies, and strong capital position would have placed Kyoei in a substantially secure financial environment.

According to the announcement, the Agricultural insurer, popularly known as JA Kyosairen, will take a 50 percent stake through a private placement upon Kyoei’s demutualization, which is set for April 2003.

S&P said that its “CreditWatch placement will be resolved following an assessment of the impact of the plan on Kyoei Fire’s overall business profile, the creditworthiness of JA Kyosairen, and the type and quality of support it can provide to Kyoei Fire.”