China’s TMNCH Credit Ratings Affirmed Excellent - AM Best

KUALA LUMPUR, April 28 (Bernama) -- Global credit rating agency, AM Best has assigned a financial strength rating of A (Excellent) and a long-term issuer credit rating of “a” (Excellent) to The Tokio Marine and Nichido Fire Insurance Company (China) Limited (TMNCH).

The outlook assigned to these credit ratings (ratings) is stable, reflecting TMNCH’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

AM Best in a statement said the ratings also factored in the rating enhancement from its parent, Tokio Marine & Nichido Fire Insurance Co Ltd (TMNF), which is the main insurance operating entity of Tokio Marine Holdings Inc.

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Benefitting from preferential access to Japanese interests abroad, business in China given its affiliation and common branding with TMNF, the company also receives various implicit support from its parent, including reinsurance protection, management oversight, and risk framework and governance.

With gross premiums written (GPW) reaching 976 million Chinese yuan in 2024, which represents less than one per cent of its total market share, TMNCH has a moderately diversified underwriting portfolio, consisting of motor, fire, marine, liability and other lines. (100 Chinese yuan = RM59.90)

In terms of its distribution channel, around 70 per cent of TMNCH’s GPW are underwritten by inward treaty contracts or on a direct basis, while the remainder is sourced through brokers and agents.

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AM Best assesses TMNCH’s risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio, supplemented by its low underwriting leverage and conservative investment strategy, as well as positive liquidity.

The company’s capital and surplus remain comparatively modest but stable, driven by partial profit retention over the years, and its solvency stays robust with a comfortable buffer above the regulatory requirement.

TMNCH’s operating performance was viewed as strong, as demonstrated by a five-year average (2019-2023) operating ratio of 88.9 per cent and a return-on-equity ratio of 11.6 per cent. In 2024, however, the company’s top-line performance was affected by the slowdown in the business activity of Japanese entities in China, as well as a more cautious approach to risk selection.

-- BERNAMA