Market Overview

A.M. Best Affirms Credit Ratings of Sompo Japan Nipponkoa Insurance Inc. and Most Subsidiaries


A.M. Best has affirmed the Financial Strength Rating (FSR) of A+
(Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of
"aa-" of Sompo Japan Nipponkoa Insurance Inc. (SJNK) (Japan).
Additionally, A.M. Best has affirmed the FSR of A+ (Superior) and the
Long-Term ICR of "aa-" of Endurance Specialty Insurance Ltd. (ESIL)
(Bermuda) and select subsidiaries. The outlook of these
Credit Ratings (ratings) remain stable. (See below for a detailed list
of these companies.)

Concurrently, Lexon Insurance Company (Austin, TX) and Bond
Safeguard Insurance Company
(Sioux Falls, SD), both newly acquired
subsidiaries of ESIL that receive explicit financial support under a
quota share reinsurance agreement, have been removed from under review
with positive implications and the FSR upgraded to A+ (Superior) from
B++ (Good) and the Long-Term ICRs to "aa-" from "bbb". The outlook
assigned to these ratings is stable.

A.M. Best also has assigned a Long-Term ICR of "a" to Sompo
International Holdings Ltd.,
a newly formed intermediate holding
company for this group. The outlook assigned to this rating is

The ratings of SJNK reflect its balance sheet strength, which A.M. Best
categorizes as strongest, as well as its strong operating performance,
favorable business profile and appropriate enterprise risk management

SJNK's balance sheet strength is due in part to its risk-adjusted
capitalization being at the strongest level, as measured by Best's
Capital Adequacy Ratio (BCAR). In addition, while balance sheet debt has
grown, the company's financial ratios remain conservative, with adjusted
debt leverage ratios generally under 25%.

While operating performance has deteriorated in the fiscal year ended
March 31, 2018, A.M. Best notes that this was driven by a number of
one-off factors, including natural catastrophes. Prospectively, in the
absence of these one-off factors, A.M. Best expects that underwriting
and operating performance will revert back to a strong level.

SJNK continues to maintain a strong competitive position, demonstrating
stable business trends as a leading non-life insurer in Japan. In
addition, the company has a growing book of overseas insurance business,
which now accounts for more than 25% of its premium revenue. A major
risk factor in its business profile assessment is the execution of its
global merger & acquisition (M&A) strategy. Nevertheless, A.M. Best
believes that the company will continue to adopt a disciplined approach
when considering its M&A opportunities.

The stable outlooks reflect A.M. Best's view that SJNK will continue to
maintain strong business trends in its domestic non-life business, as
well as developing its overseas insurance business in a prudent manner.

Negative rating actions could occur if there is material deterioration
in its risk-adjusted capitalization due to a significant decline in
operating performance. Potential large-scale catastrophe events or a
failure to execute its M&A strategy also could cause downward ratings
pressure if SJNK's financial condition is adversely affected.

The rating affirmations of ESIL and its select subsidiaries reflect the
balance sheet assessment being at the strongest level, adequate
operating performance, neutral business profile and appropriate ERM.
Additionally, ESIL benefits from SJNK's explicit financial support in
the form of a net worth maintenance agreement and thus receives
additional rating enhancement.

The FSR of A+ (Superior) and the Long-Term ICRs of "aa-" have been
affirmed with a stable outlook for the following subsidiaries of Endurance
Specialty Insurance Ltd.

  • Endurance Assurance Corporation
  • Endurance Worldwide Insurance Limited
  • Endurance American Specialty Insurance Company
  • Endurance American Insurance Company
  • Endurance Risk Solutions Assurance Co.
  • American Agri-Business Insurance Company
  • Sompo America Insurance Company
  • Sompo America Fire & Marine Insurance Company

The following Long-Term Issue Credit Ratings have been affirmed with a
stable outlook:

Sompo International Holdings Ltd.—

-- "a-" on $335 million 7% senior unsecured notes, due 2034 (issued by Endurance
Specialty Holdings Ltd.
and guaranteed by Sompo International
Holdings Ltd.

-- "a-" on $300 million 4.7% senior unsecured notes, due 2022 (issued by Montpelier
Re Holdings Ltd.
and guaranteed by Sompo International Holdings

Ratings are communicated to rated entities prior to publication.
Unless stated otherwise, the ratings were not amended subsequent to that

This press release relates to Credit Ratings that have been published
on A.M. Best's website. For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please see A.M. Best's
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases

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