AM Best Affirms Ratings for Mitsui Sumitomo and Aioi Nissay Dowa Insurance

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "aa" (Superior) for Mitsui Sumitomo Insurance Company, Limited (MSI) and its subsidiaries. Additionally, Aioi Nissay Dowa Insurance Company Limited (ADI) holds the same ratings. Aioi Nissay Dowa Insurance (China) Company Limited (ADIC) has been affirmed with an FSR of A- (Excellent) and a Long-Term ICR of "a-" (Excellent). The outlook for all these ratings remains stable, with these entities being integral to the MS&AD Insurance Group Holdings, Inc. Furthermore, AM Best assigned an FSR of A+ (Superior) and a Long-Term ICR of "aa" (Superior) to MSIG Specialty Insurance America, Inc., all while maintaining a stable outlook.

These ratings underscore the importance of MSIG Specialty Insurance America, Inc. to its parent company, as it bolsters its U.S. market presence through excess and surplus segments. Operating under the MSIG USA brand, the company engages in a pooling agreement with other U.S. subsidiaries, thus demonstrating its strategic importance.

The group's ratings are strengthened by MS&AD's robust balance sheet, strongest operational outcomes, advantageous market positioning, and effective enterprise risk management practices. MSI and ADI play pivotal roles within the group, significantly contributing to its financial and strategic aims.

ADIC's ratings reflect its robust balance sheet and adequate operating outcomes, highlighting its vital position within its parent company, ADI. Its capitalization and regulatory solvency are key supportive factors, despite challenges posed by deferred tax assets to its capital base.

MS&AD exhibits strong capital adequacy, bolstered by moderate financial leverage and a conservative capital strategy. The group's strategic initiatives include portfolio diversification to mitigate domestic equity risk despite utilizing equity credit in BCAR hybrid securities.

The group's strong operational performance stems from effective domestic underwriting, profitable international operations, and strategic asset disposals. AM Best observes that the group has benefited from recent premium rate adjustments and a reduction in natural catastrophe claims.

MS&AD commands a dominant market position in Japan, representing about one-third of the non-life insurance market through MSI and ADI. The planned integration of MSI and ADI by April 2027 aims to solidify their competitive stance in the Japanese market, while MS&AD's international expansion targets the U.S. specialty insurance arena. AM Best anticipates the group's centralized governance will effectively support international operations. ADIC remains resilient, with a very strong balance sheet and earnings contributing to capital surplus growth, fortified by sustainment from ADI through brand recognition and strategic initiatives.