AM Best Affirms Nissan Re Credit Ratings
AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- [Excellent] and the Long-Term Issuer Credit Rating of “a-” [Excellent] of Nissan Global Reinsurance, Ltd. [NGRe] [Hamilton, Bermuda].
The ratings agency said, “The Credit Ratings [ratings] reflect NGRe’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
“The negative outlooks reflect AM Best’s expectation that the parent company will continue to experience negative pressure driven by global economic conditions and the recently enacted U.S. tariff policy. That said, the captive remains an integral component of the business plan and risk management framework of its parent, Nissan Motor Co., Ltd. [Nissan] [NASDAQ: NSANY], which continues to support its strategic objectives and risk mitigation efforts.
“The balance sheet strength assessment is supported by NGRe’s level of risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio [BCAR]. While NGRe consistently has generated strong annual earnings, its total surplus has declined over the past five years as dividends returned to the parent have exceeded those earnings. However, the captive maintains sufficient liquidity, supported by positive cash flows from its selected risks and exposures. NGRe’s operating performance assessment of adequate reflects consistent favorable annual combined and operating ratios over the last five years. As a single-parent captive for Nissan, one of the largest automakers in the world, NGRe provides Nissan a wide range of insurance coverages in the United States and abroad, including but not limited to extended service contracts, product liability and inland marine. As part of the Nissan family of companies, NGRe benefits from the group’s proprietary data warehouse, extensive risk management practices and loss control programs.
“Negative rating action could occur if the captive’s risk-adjusted capitalization weakens to a level that no longer supports its balance sheet strength assessment or if the captive’s financial condition materially differs from projections through extraordinary dividends. Negative rating action could also occur if AM Best’s perception changes in the parent’s ability and willingness to support the company. Although unlikely in the near term, positive rating action could occur from a sustained trend in the company’s positive operating performance.”
