Tokio Marine Newa Insurance Co. Ltd. Ratings Affirmed At #A# On Improved Enterprise Risk Outlook Stable

Stocks and Financial Services Press Releases Friday January 20, 2017 16:59
TAIPEI--20 Jan--S&P Global Ratings

TAIPEI (S&P Global Ratings) Jan. 20, 2017--S&P Global Ratings said today it had affirmed its 'A' local currency insurer financial strength rating and counterparty credit rating on Taiwan-based Tokio Marine Newa Insurance Co. Ltd. The outlook is stable. At the same time, we also affirmed the 'cnAA+' Greater China regional scale rating on the insurer.

"The rating affirmation on Tokio Marine Newa reflects our view that the insurer's overall credit profile has performed within our expectation," said S&P Global Ratings credit analyst Serene Hsieh. "We have revised our assessment of Tokio Marine Newa's enterprise risk management (ERM) to adequate with strong risk controls from adequate previously. This reflects our assessment that the insurer has benefited from its close link with Japan-based Tokio Marine group, which we assess as having a strong ERM framework."

Tokio Marine Newa has a good track record of implementing risk controls over key risk factors, which have been well established with clearly defined risk limits and well executed risk disciplines, in our opinion. However, the revised ERM score does not result in any rating uplift. This is because we view Tokio Marine Newa's risk exposure (mainly insurance and investment exposure) as relatively simple, mainly short-tail personal lines of business.

The Tokio Marine group also provides sufficient reinsurance capacity in a stable manner, in our view. We expect this support to be available to Tokio Marine Newa whenever needed. The insurer's investment book is mainly composed of fixed-income securities and we believe there is a low risk of interaction between insurance and investment businesses under stress events.

"The stable outlook on Tokio Marine Newa reflects our expectation that the insurer will remain a strategically important entity to the wider Tokio Marine group for the next two years," added Ms. Hsieh. "We also expect Tokio Marine Newa to maintain very strong capital and earnings over the same period."

In our view, the insurer is likely to maintain a higher business contribution from motor business than its peers', despite the higher growth plan for its non-motor business. At the same time, we expect Tokio Marine Newa to maintain an above-average operating performance with good underwriting controls, given still-intense competition in the local non-life insurance market.

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