S&P Raises Japan’s Nisshin Fire Ratings to ‘BBB+’ After Tokio Marine Buy

Standard & Poor’s Ratings Services announced that it has raised its long-term counterparty credit and financial strength ratings on Nisshin Fire & Marine Insurance Co. Ltd. to “BBB+” from “BBB”, after Tokio Marine & Nichido Fire Insurance Co. Ltd. (AA-/Stable/–) acquired an additional 30.99 percent of Nisshin Fire’s total issued shares. The outlook on the ratings is stable.

“The rating action is based on the increased probability that Nisshin Fire’s business franchise will be further strengthened by the progressing business alliance with Tokio Marine & Nichido Fire following the stock purchase,” stated S&P credit analyst Koichi Iwama.

S&P noted: “Nisshin Fire’s operating performance should benefit from the expansion in its network of small to midsize distributing agents through the business alliance with Tokio Marine & Nichido Fire, in addition to access to Fukoku Mutual Life Insurance Co.’s sales forces, which are set to distribute Nisshin Fire’s non-life insurance products.”

The rating agency also observed: “Since Nisshin Fire is expected to maintain management independence from Tokio Marine & Nichido Fire and not become part of the Millea Holdings group even if Millea Holdings’ investment ratio reaches 33 percent, some uncertainty over the feasibility of the business and capital alliance between the two companies remained at first.

“However, today’s stock purchase indicates the growing likelihood that Nisshin Fire’s business franchise will be further strengthened by the progressing business alliance with Tokio Marine & Nichido Fire. Nisshin Fire’s financial profile is expected to remain at an adequate level for the current rating over the medium term given the company maintains relatively strong capitalization. However, the rating on the company may be pressured if Tokio Marine & Nichido Fire changes its equity holdings policy in the future.”

Topics Japan