Best Affirms Tokio Millennium Re ‘A++’ Ratings; Outlook Stable

By Charles E. Boyle | December 23, 2013

A.M. Best Co. has affirmed the financial strength rating of ‘A++’ (Superior) and issuer credit rating of “aa+” of Swiss-based Tokio Millennium Re AG (TMR), both with stable outlooks.

Best explained that “TMR is a wholly owned subsidiary of Tokio Marine & Nichido Fire Insurance Co., Ltd. (TMNF), which is the main trading subsidiary of Tokio Marine Holdings, Inc. (Tokio Marine Group). Both companies are domiciled in Tokyo, Japan. TMR re-domesticated to Switzerland from Hamilton, Bermuda on October 15, 2013.”

The ratings “reflect TMR’s superior financial strength, its effective risk management, favorable historical operating performance and its very strong risk adjusted capital position,” Best said. “In addition TMR benefits from the global recognition and balance sheet strength of TMNF, as well as the implicit and explicit support provided by TMNF. The ratings also consider the key role that TMR plays in transferring and accepting extreme risks in the international reinsurance market, which is a part of the overall groups’ strategy of geographic diversification.

“Tokio Marine Group has unified its global reinsurance brand under TMR over the past few years. TMR predominately writes property catastrophe and specialty reinsurance and has been slowly expanding into casualty reinsurance since mid-2011 to diversify its book of business. TMR continues to be a leader in transforming and transferring reinsurance risk to the capital markets through its Tokio Solution Management Ltd. and Shima Re subsidiaries.”

Best’s report also noted that “TMR continues to innovate and improve its already strong ERM platform by continuing to add more staff to enhance the overall risk ownership by each business unit.

“TMR’s property catastrophe modeling uses multiple commercial models as well as proprietary models, which have both a scientific and quantitative focus. This multi model approach allows TMR to assume risks that it can identify and model with a high degree of certainty. Effective ERM was evidenced by TMR’s limited losses from Superstorm Sandy, even with exposure to the storm in their book of business. Given the higher catastrophe risk that is taken, TMR has a more conservative asset strategy in place.”

As partial offsetting factors Best cited “TMR’s exposure to low frequency, high severity catastrophic events, growth into newer markets through it branches as well as diversification into casualty lines of business.”

Source: A.M. Best

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