A.M Best Upgrades Tokio Millennium Re

November 4, 2011

A.M. Best Co. today [Nov.4] upgraded the financial strength rating to A++ [Superior] from A+ [Superior] and the issuer credit rating to “aa+” from “aa-” of Bermuda’s Tokio Millennium Re Ltd.

The outlook for both ratings is stable.

Based on Pitts Bay Road, TMR is a wholly owned subsidiary of Tokio Marine & Nichido Fire Insurance Co., Ltd., which is the main trading subsidiary of Tokio Marine Holdings, Inc.

Both companies are domiciled in Tokyo, Japan.

Best said TMR remains strategically important to Tokio Marine Group’s initiatives to geographically diversify its aggregation of natural perils, help enhance its enterprise risk management and ultimately establish a diversified portfolio that provides earnings stability.

Over the past year, Tokio Marine Group has taken steps to unify its global reinsurance brand under TMR. TMR benefits from the global recognition and balance sheet strength of TMNF. TMR predominately writes property catastrophe and specialty reinsurance and is expanding into casualty reinsurance. In addition, TMR is a leader in transforming and transferring reinsurance risks to the capital markets.

The ratings reflect TMR’s superior financial strength, favorable operating performance over the last several years and its prudent risk management practices.

In addition, the ratings are enhanced by the implicit and explicit support provided by TMNF. The ratings also consider TMR’s role within the Tokio Marine Group and its strategic importance to the organization, which has become more evident given the branding initiative and structural realignment that was approved by Tokio Marine Group in the second half of 2010.

Best said TMR has a scientific and quantitative focus and looks to take on risk that it can identify with and model with a high degree of comfort. Property catastrophe modeling is done utilizing commercially available models in order to obtain a market view, and in addition, TMR has developed and utilizes a proprietary model to form its own view of property catastrophe risk.

This allows the company to be more selective or competitive as management sees appropriate. Furthermore, TMR maintains a conservative investment portfolio, in part, to position itself for strong risk taking capacity from an underwriting perspective.

Partially offsetting these positive rating factors is TMR’s exposure to low frequency, high severity catastrophic events, as evidenced by the New Zealand earthquake in February 2011. The losses from the New Zealand earthquake have significantly impacted TMR’s financial performance for this year; however, the company remains well capitalized and well positioned to take advantage of improving property catastrophe rates in the global market place.

Tokio Millennium Re Ltd. was established in Bermuda in March 2000, the year of the millennium from which its name originates.

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