15 December 2016Bermuda analysis

AM Best affirms ‘excellent’ rating of Nissan Global Re

AM Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” of Nissan Global Reinsurance (NGRe), based in Bermuda. The outlook of these credit ratings is stable.

According to AM Best, the ratings reflect NGRe’s strong risk-adjusted capitalisation, significantly improved underwriting performance over the past four years and its conservative underwriting strategy.

The ratings also consider NGRe’s role as a captive insurer for its parent, Nissan Motor as well as its role within the profitable extended service contract and extended warranty businesses initiated by Nissan.

“These rating factors are partially offset by the company’s concentration in asset-backed securities (ABS) and its exposure to property-related catastrophes. The company’s sizable investments in ABS account for nearly two times policyholders’ surplus and are composed of the higher-risk automobile loans originated at Nissan’s financing company,” AM Best said.

“These risks are mitigated by diversification and materiality of the underlying loans, as well as the substantial cash flows that are generated and make up a principal source of earnings for NGRe. NGRe’s catastrophe exposure stems from its property and marine cargo coverages written for its affiliates and ceded to wholly owned subsidiary companies.”

NGRe is a single-parent captive of Nissan. In its role as a single-parent captive, NGRe provides Nissan with a host of insurance coverages in the US and abroad.