Nissan Fire and Marine Affirmed

A.M. Best Co. affirmed the FSR of “A” for The Nissan Fire and Marine Insurance Company Ltd., Tokyo, and its U.S. branch in New York. The company has been assigned a financial size category of “XIV.”

The rating reflects Nissan Fire’s excellent capitalization, strong affiliation with the Hitachi-Nissan Group, and increasing corporate ties with other insurance and financial services companies within the Mizuho Financial Group. Also recognized is Nissan Fire’s above-average profitability relative to its peers as measured by a 4.7 percent return on equity in fiscal year 1999 (ended March 31, 2000). Nissan Fire’s conservative net premium leverage of 0.6 times at fiscal year-end 1999—with surplus adjusted for unrealized capital gains and contingency reserves—compares favorably with U.S. and other world market insurers with similar business profiles.

Offsetting the positive factors are concerns of the impact of a prolonged weak Japanese economy on Nissan Fire. A further concern is the highly competitive operating environment that has emerged in the Japanese non-life insurance market, a result of the ongoing regulatory reform of the Japanese insurance and financial services industries.

The competitive environment and currently depressed Japanese economy have resulted in slowed premium growth, reduced underwriting profitability, and declining dividend and interest income. While these weak fundamentals likely will result in continued pressure on Nissan Fire’s operating performance in the near term, it has developed diversified strategies for improving future premium growth and profitability.

These include strengthening internal operations, as well as merging and forming alliances with other financial services companies.