OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating (FSR) of B++ (Good) and issuer credit rating (ICR) of "bbb+" of The Fuji Fire & Marine Insurance Company, Limited (Fuji Fire) (Japan). The ratings have been removed from under review with negative implications. The ICR has been assigned a negative outlook and the FSR a stable outlook.

The negative outlook for the ICR reflects A.M. Best's concerns about the company's capital buffer to absorb any negative impacts due to market volatility. Moreover, A.M. Best estimates that the capital growth will be slower going forward.

During fiscal year 2008, the overall combined ratio deteriorated by 3% to 101%. This is mainly due to the premium rate change of CALI business and the accelerated payment in motor business. The accelerated payment will be stabilized. Also, the premium rate of motor business is expected to increase this fall. The company launched a business plan including JPY 7 billion of cost reduction by 2010.

Fuji Fire is reducing its risk assets to prevent further deterioration of capital and surplus, which caused around JPY 90 billion of impairment losses in fiscal year 2008. Moreover, the hedge options to prevent further significant losses from securities are still available. These actions eased concerns on further deterioration on capital, and the company maintained a relatively favorable solvency margin ratio. As of March 2009, the company's capital adequacy measured by local solvency margin was around 506%, which is still favorable to maintain the ratings.


However, A.M. Best has concerns regarding the relatively large amount of deferred tax assets (DTA) from investment losses compared to Fuji Fire's capital and surplus. Although the equity market indices have bounced back after closing financial results for fiscal year 2008, A.M. Best is cautious of the company's investment income due to low interest rates and uncertainty in the market.

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:

Sanghoon Oh, +852-2827-3413

sanghoon.oh@ambest.com

or

Moungmo Lee, +852-2827-3403

moungmo.lee@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.