S&P Raises Outlook on Nisshin Fire Ratings to Stable

December 1, 2003

Standard & Poor’s Ratings Services announced that it has revised its ratings outlook on Japan’s Nisshin Fire & Marine Insurance Co. Ltd. to stable from negative. S&P also affirmed the insurer’s ‘BBB-‘ financial strength and counterparty credit ratings.

The move reflects the rating agency’s “expectation that the insurer will be able to maintain its financial profile at the current level even amid the difficult operating environment for the Japanese non-life industry,” said the bulletin. “Nisshin Fire should be able to successfully generate benefits from its alliance with the higher rated Tokio Marine & Fire Insurance Co. Ltd. (AA-/Negative/–).”
“Nisshin Fire is implementing a differentiation strategy to reduce and diversify its underwriting risks by shifting its focus squarely onto its retail business for individual consumers, and away from commercial insurance, and reduce its risk assets,” stated S&P credit analyst Kai Nakajima.

The announcement noted, however, that “fierce competition in the domestic non-life insurance industry is likely to continue in a market with no growth potential (excluding the abolition of the government reinsurance pool system for compulsory automobile insurance), although the alliance with Tokio Marine should mitigate the effects.

“The rating on Nisshin Fire could be raised if the company can expand its strategy and secure sound earnings, and if its affiliation with Tokio Marine progresses smoothly,” it concluded.

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