Fuji Fire's ratings reflect its adequate risk-adjusted capitalization and improvement in its profitability. The company reported an improvement in its operating performance in the first half of fiscal year 2013, driven by the recovery in its auto underwriting results.
AIUís ratings reflect its distinctive presence in the Japanese market as a significant provider of accident and health insurance (A&H) and the expected improvement in its profitability. AIUís underwriting results are expected to improve in the midterm, driven by a restructuring in its reinsurance arrangements.
AIUís retention remained at approximately 22% over the past five years ending in 2013, with a significant portion of risk ceded to AIGís affiliates. The small base of net premium income under J-GAPP resulted in weak profitability and high volatility in its operating ratio in that five-year period.
Fuji Fire and AIUís ratings consider the support from their parent company,
The companies are well positioned at their current rating level. Negative rating actions could occur if there is a significant worsening of their operating results and a substantial deterioration in their risk-adjusted capitalization. Any unfavorable rating actions on AIG could also put downward pressure on the companiesí ratings.
The methodology used in determining these interactive ratings is Bestís Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestís rating process and contains the different rating criteria employed in the rating process. Bestís Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This rating announcement has been issued by
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