OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit rating (ICR) of "a+" of Aioi Insurance Company, Limited (Aioi) (Japan). The outlook for both ratings is stable.

The ratings reflect Aioi's stable underwriting performance, adequate capitalization and the planned business alliance among Aioi, Mitsui Sumitomo Insurance Company, Limited and Nissay Dowa General Insurance Company Ltd.

Although the continuing extreme volatility in the capital markets has negatively impacted Aioi's capitalization, the company has maintained an adequate level of risk-based capitalization to support the current ratings. The company's capital and surplus stands at JPY 379 billion as of September 2008, with an additional catastrophe reserve of JPY 249 billion.

Aioi's underwriting performance has been stable over the past five years. Excluding fiscal year 2004, the company recorded a combined ratio of below 100% using a loss ratio based on incurred/earned basis. Aioi maintained a satisfactory sales volume in various business lines when the overall market was experiencing a negative growth. Aioi has a competitive advantage in the automobile business, along with the growth plan of the "Toyota Market Strategy" in the domestic and overseas markets. A.M. Best believes that the sales momentum for Aioi would continue to be strong with the planned merger with Nissay Dowa General Insurance Company Ltd.

Partially offsetting these positive rating factors are the high expense ratio relative to other major non-life companies and the depressed economy, which will limit the growth of the non-life industry.


Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and assigned an ICR of "a+" to Aioi Insurance Company of America (Aioi America) (New York, NY). The outlook for each of these ratings is stable.

The rating actions reflect Aioi America's favorable operating performance and capitalization, and the comprehensive reinsurance program provided by its parent, Aioi.

With the planned merger between Aioi and Nissay Dowa General Insurance Company Ltd, A.M. Best expects that the company's expense ratio will decrease in the medium term and its profitability will improve as it grows larger in size.

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Co.

Analysts

Moungmo Lee, +852-2827-3402

moungmo.lee@ambest.com

or

Sanghoon Oh, +852-2827-3404

sanghoon.oh@ambest.com

or

Public Relations

Jim Peavy, +(1) 908-439-2200, ext. 5644

james.peavy@ambest.com

or

Rachelle Morrow, +(1) 908-439-2200, ext. 5378

rachelle.morrow@ambest.com

Source: A.M. Best Co.