A.M. Best Affirms Ratings for DTRIC Insurance Company Limited

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May 29, 2015 12:39 PM EDT

HONG KONG--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit ratings of “a” of DTRIC Insurance Company Limited (DTRIC) and its reinsured affiliate, DTRIC Insurance Underwriters, Limited. The outlook for both ratings remains negative. Both companies are domiciled in Honolulu, Hawaii.

The ratings reflect the implicit and explicit support provided by its major shareholder Aioi Nissay Dowa Insurance Company Limited (ADI) (Japan), which owns 74.48% of DTRIC’s shares. ADI supports the company in the development of the auto insurance market through Toyota dealers, participates in DTRIC’s major reinsurance arrangements, helps the company to enhance an enterprise risk management scheme and provides a financial guarantee.

The risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, slightly decreased from the previous year, which remained at a relatively low level compared with the previous two years. In the wake of the deterioration in operating profitability led by the aggressive expansion in commercial line from 2011 to mid-2013, the management team put forth effort to recover profitability in the past two years by implementing underwriting guidance changes and rate increases in its major product lines and de-marketing the customer segments with poor loss ratio records. As a result, DTRIC’s loss narrowed significantly in 2014. Operating cash flow also improved significantly in 2014 compared with previous years. DTRIC has set up conservative loss reserve for its major lines, which could offset any adverse loss reserve development going forward.

Continued improvement in risk-adjusted capitalization and improved operating performance could lead to a stable outlook. The absence of an improvement in risk-adjusted capitalization or a material decline in operating performance could lead to negative rating actions.

The methodology used in determining these interactive ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

  • Catastrophe Analysis in A.M. Best Ratings
  • Rating Members of Insurance Groups
  • Risk Management and the Rating Process for Insurance Companies
  • Understanding BCAR for Property/Casualty Insurers

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best Company
Seewon Oh, +852-2827-3404
Associate Director
[email protected]
or
Moungmo Lee, +65-6589-8412
General Manager, Analytics
[email protected]
or
Christopher Sharkey, +(1) 908 439 2200, ext. 5159
Manager, Public Relations
[email protected]
or
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Company


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