Toa Reinsurance Co has made efforts to improve its profitability, says S&P Global Ratings in a recent report titled "Asia-Pacific Reinsurance Sector Update - Improvements Are Underway".
Toa Re had expanded its business portfolio overseas to diversify its earning source and risk, although the performance of overseas business has not been fully successful, in S&P’s view.
The group's operating performance deteriorated during fiscal 2018 to 2022 (year ending 31 March) with over 100% combined ratio. This was caused by a series of unforeseen industry-wide events such as the pandemic, additional reserve accumulation in its US non-life reinsurance business because of social inflation, and several natural catastrophes.
In response to this, the group has sought to improve its profitability. As a result, the group’s underwriting performance improved with around 97% combined ratio in fiscal 2023.
In addition, S&P expects Toa Re's strong capital commitment to work and to take measures to secure its capital level commensurate with the '99.99%' confidence level in its model. The group has publicly set such numerical targets for capital in its medium-term management plan.
Toa Re's strong foothold in the Japanese reinsurance market and excellent capital position support its overall credit profile.
Toa Re is the only reinsurance group in Japan that serves both the non-life and life sectors in domestic and overseas markets, and it has maintained direct relationships with Japanese clients since its establishment in 1940.