AM Best Downgrades Ratings of Tokio Marine GRV Re in Oklahoma City

April 7, 2019

AM Best has downgraded the Financial Strength Rating (FSR) to A (Excellent) from A++ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” from “aa+” of Tokio Marine GRV Re Inc. (TMGRV Re) in Oklahoma City.

The outlook of these ratings is stable.

The ratings reflect TMGRV Re’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and very strong enterprise risk management (ERM).

The ratings downgrade reflects a change in business profile whereby TMGRV Re, formerly known as HCC Specialty Insurance Co., was converted into an affiliated internal reinsurance company. It will assume business solely from companies within the Tokio Marine & Nichido Fire (TMNF) organization. Previously, the company derived its rating through explicit support provided by an inter-company reinsurance agreement with Houston Casualty Co.

The ratings reflect the capacity available in the balance sheet for the expected level of assumed risk. Operating performance is placed at the adequate level based on the clearly defined business plan, which contemplates a level of execution risk.

AM Best views the business profile as limited under the implemented transition to a reinsurance company structure. The ratings benefit from implicit support provided by affiliated entities, including an expectation of capital contributions if needed, day-to-day management of operations, and inclusion in TMNF’s robust ERM processes and procedures.

Source: AM Best

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