Nissan's Bermuda captive receives rating upgrade

Ratings agency AM Best has upgraded the financial strength rating to A (Excellent) from A- (Excellent) of Nissan Global Reinsurance (NGRe), the Bermuda-based captive insurer of automaker Nissan Motor Co.

The outlook of these ratings remain stable, and reflect NGRe's balance sheet strength, which AM Best categorises as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The neutral business profile considers NGRe’s strategic role as a captive insurer for its parent Nissan.

NGRe's ratings were upgraded based on the ratings agency's assessment of NGRe’s balance sheet strength and the risks associated with its significant asset-backed securities (ABS) investments.

The captive's sizable ABS investments originate at Nissan’s affiliated financing companies. AM Best said that despite its substantial relative size, the underlying loans are considered of high credit quality and have been performing in accordance with expectations.

"These investments play an integral role in NGRe’s capital resources and generate substantial cash flows that also drive a principal source of earnings for NGRe," said AM Best. "The investment and liquidity risks related to ABS also were incorporated into this rating assessment."

As the single-parent captive of Nissan, NGRe provides Nissan with a range of insurance coverages in the US and abroad. It benefits from the group’s proprietary data warehouse, extensive risk management practices and loss control programmes.