Best Assigns Mitsui Sumitomo U.S. ‘A+’ Rating

A.M. Best Co. announced that it has assigned a financial strength rating of “A+” (Superior) to the Warren N.J.-Based Mitsui Sumitomo Insurance Group (MSIG) with a stable outlook.

Best noted that MSIG was formed on January 1, 2003, as a pooling arrangement between Mitsui Sumitomo Insurance Company of America (MSIA) and Mitsui Sumitomo Insurance USA Inc. (MSU).

“The rating reflects the pool’s status as a core operation to its members’ parent company, Mitsui Sumitomo Insurance Co., Ltd. (MSI) (Japan), a strong capital position and good consistent investment returns,” said Best. “An offsetting factor is continued underwriting losses.”

“MSIA and MSU entered into a reinsurance pooling agreement in an effort to increase operational efficiencies and to market MSI’s American subsidiaries as a group in the United States,” the bulletin continued. “With a 90 percent share, MSIA is the pool leader, while MSU holds the remaining 10 percent. As a result, the pool has strong risk-adjusted capitalization as measured by A.M. Best’s capital adequacy model.

“Due to its large invested asset base, the company has recorded good investment returns, and as a result, overall earnings—albeit negative—have improved. While the pool has continued to experience underwriting losses, it is expected that costs will be more efficiently managed under this new structure, leading to an improvement in underwriting results.”