S&P Assigns Mitsubishi’s New Century ‘A-‘ Rating; CreditWatch Positive

January 10, 2006

Standard & Poor’s Ratings Services announced from its Tokyo office that it has assigned its “A-” insurer financial strength rating to New Century Insurance Co. Ltd. and placed the rating on CreditWatch with positive implications.

“Because New Century is a pure captive insurance arm and core subsidiary of Mitsubishi Corp. (A-/Watch Pos/A-2), it shares the same rating as its parent,” S&P explained. “Mitsubishi Corp. holds a 98.8 percent stake in the insurer, which is licensed in Bermuda and plays an important role in Mitsubishi Corp.’s risk management.”

S&P noted further: “New Century’s operations are restricted to reinsuring risks of its parent and group companies. The insurer plans to enhance its capitalization through profit accumulation, while gradually expanding its underwriting throughout the Mitsubishi Corp. group. New Century has realized high profitability backed by favorable performance from its marine cargo insurance segment, which accounts for the majority of its reinsurance underwriting.

“Most of its assets are bank deposits, so the insurer has good asset quality and liquidity, although investment return is low. New Century is exposed to exchange risks because its assets are dollar denominated. However, the weighting of dollar-denominated settlements should rise in line with the growth of the parent company’s overseas energy transactions.

“The insurer has sufficient capitalization relative to risk, and it can expect support from Mitsubishi Corp., should the need arise. The insurer retrocedes its policies appropriately. The CreditWatch listing is linked to that on the ratings on Mitsubishi Corp. Should Standard & Poor’s raise its ratings on Mitsubishi Corp., the ratings on the insurer would also be raised, representing expectations for stable profit expansion. On the other hand, if the outlook on the ratings on Mitsubishi Corp. is revised to stable, the outlook on New Century would follow.”

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