Fitch affirms Tokio Marine & Nichido Fire Insurance's strength amid challenges

TMNF’s assessment considers TMHD's robust company profile, strong financial performance, and solid capital adequacy

Challenges arising for Tokio Marine Holdings (TMHD) are high exposure to domestic equities and sovereign debt, although plans to reduce domestic equity investments are in place, according to Fitch Ratings. 

The company faces scrutiny regarding alleged cartel activities in raising property insurance premiums, but the impact is expected to be manageable, pending ongoing investigations by Japan's Financial Services Agency.

Fitch Ratings has affirmed Tokio Marine & Nichido Fire Insurance Co., Ltd.'s (TMNF) Insurer Financial Strength is “very strong” with a stable outlook. TMNF is a core company of TMHD.

The rating considers TMHD's robust company profile, strong financial performance, and solid capital adequacy, which help mitigate risks from its domestic equity exposure and high concentration in sovereign securities. 

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TMHD has managed well through natural catastrophes in Japan due to its diversified business and investment portfolios.

Key rating drivers include TMHD's very strong capitalization, although its solvency margin ratio dipped due to higher foreign bond yields.

Premium hikes have been implemented to offset negative impacts from domestic natural disasters, aiming for underwriting profitability recovery. TMHD is expanding its international insurance operations, with significant contributions expected from its US business unit.