Fitch Ratings affirmed the insurer financial strength rating of Tokio Marine & Nichido Fire Insurance Co. Ltd. at A+, with a negative outlook.
The rating agency on April 3 said the rating reflects the expectation that the Japanese company will maintain its sound capitalization and strong franchise. The company is likely to maintain healthy profitability for the fiscal year 2017 as it plans to hold steady premium rates.
Fitch says the Japanese insurer's biggest weakness is its domestic equity holdings. However, the company plans to lessen its domestic equity investment by more than ¥100 billion in 2017.
A rating upgrade is unlikely in the near future given the constraint from Japan's rating. The country's long-term local currency issuer default rating is at A, with a negative outlook.
Conversely, a downgrade of Japan's rating will likely lower the rating of the insurer. A downgrade is also possible if the company's capital and net leverage deteriorate significantly and if its consolidated solvency margin ratio falls below 600%.
Tokio Marine & Nichido Fire Insurance is a unit of Tokio Marine Holdings Inc.
As of April 3, US$1 was equivalent to ¥111.00.