HONG KONG–(BUSINESS WIRE)–#insurance—AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” (Excellent) of DTRIC Insurance Company, Limited (DTRIC) and its reinsured affiliate, DTRIC Insurance Underwriters, Limited. Both companies are domiciled in Honolulu, HI.
The Credit Ratings (ratings) reflect DTRIC’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management. The ratings also consider the impact of implicit and explicit support DTRIC receives from its parent, Aioi Nissay Dowa Insurance Company Limited (ADI), a member of MS&AD Insurance Group Holdings, Inc. ADI has an FSR of A+ (Superior) and is classified under the Financial Size Category of XV ($2 billion or greater).
The revision of the outlooks to stable from negative reflects AM Best’s expectation that DTRIC’s risk-adjusted capitalisation and overall balance sheet fundamentals will recover swiftly in 2025 and remain supportive of the current balance sheet strength assessment over the medium term, following the planned additional capital injection from ADI and reduction in risk exposure as it transitions to a new business model, which will have a significant focus on personal auto business. AM Best expects that ADI will continue its strong commitment to support DTRIC in maintaining a sufficient solvency buffer throughout the business transition period. DTRIC’s moderately high levels of net exposure to potential losses from catastrophe events and reinsurance dependence are expected to be reduced materially as it plans to run off most of its commercial lines.
DTRIC’s marginal operating performance assessment reflects the company’s overall profitability lagging the composite average. Amid the transition to the new business model, DTRIC reported a sharp drop in net premiums and profit deterioration in 2024 mainly due to a material decline in commercial lines, despite recording a strong growth in personal auto. Overall, AM Best expects DTRIC’s key operating metrics will remain pressured by a further reduction in its premium base and increased expense burden over the medium term, although stable investment income remains as a partial buffer for the underwriting volatility.
Despite its small size relative to the parent, DTRIC is integrated highly into ADI’s global strategic plans. Additionally, DTRIC receives explicit support from ADI in areas such as reinsurance, capital contributions, and a written parental financial guarantee agreement.
Negative rating actions could occur if there is a significant deterioration in DTRIC’s risk-adjusted capitalisation to a level that cannot support the current balance sheet strength assessment. Negative rating actions could arise if there is a significant reduction of support from ADI or material deterioration in ADI’s credit profile. While viewed to be unlikely in the medium term, positive rating actions could occur if DTRIC demonstrates sustained and notable improvement in its underwriting and operating profitability for a period of time, while maintaining strong balance sheet strength.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on AM 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 see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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