AM Best has affirmed the financial strength rating of A (Excellent) and the Long-term issuer credit ratings of “a+” (Excellent) for The Toa Reinsurance Company (Toa Re) of Japan and its subsidiaries. The outlook for these credit ratings remains stable.
The ratings are based on Toa Re’s balance sheet strength, which AM Best describes as the strongest category, along with adequate operating performance, a favorable business profile, and appropriate enterprise risk management. The company’s consolidated risk-adjusted capitalization remains at the strongest level.
AM Best noted that the elevated reserve position at TRA continues to present some uncertainty to the group’s balance sheet strength, due to ongoing social and economic inflation pressures. However, the impact of these pressures has moderated compared to previous years.
In fiscal year 2024, Toa Re reported a significant increase in net profits, with net income rising to ¥28.5 billion. The improvement was attributed to stronger underwriting performance, which benefited from reduced natural catastrophe losses, a disciplined underwriting approach, and multi-year portfolio repositioning.
Higher investment returns from increased interest and dividend income also contributed to the results. TRA, while still facing pressure from reserve strengthening, recorded improved underwriting performance in 2024, with a lower combined ratio and a narrowing underwriting loss for the year.
Toa Re’s financial results in fiscal 2023 reflected a net income of ¥15.6 billion, driven by higher investment returns and improved underwriting performance. The company wrote ¥280.8 billion (about US$1.9 billion) in premiums during the same period, with the improvement partly attributed to non-life portfolio rebalancing and the absence of COVID-19-related losses that had affected prior results.
Toa Re is the only domestic commercial reinsurer in Japan, maintaining a strategically important market position with long-standing relationships among Japanese insurers. The group operates a diversified underwriting portfolio across product lines and geographic regions.
Its subsidiaries, TRA and TRE, have established a substantial international presence, providing premium diversification and supporting the group’s strategic expansion.
Approximately 33% of the group’s total net premium written is derived from its life reinsurance portfolio. This product mix enhances the group’s overall portfolio stability, given the low correlation between life reinsurance and catastrophe-exposed non-life business lines.
What are your thoughts on this story? Please feel free to share your comments below.
