AM Best upgrades ratings of Nissan captive

AM Best has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and the long-term issuer credit rating to “a” from “a-” of Bermuda-based Nissan Global Reinsurance. The outlook of these ratings remains stable.

According to AM Best the ratings reflect NGRe’s balance sheet strength, which AM Best categorises as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The neutral business profile considers NGRe’s strategic role as a captive insurer for its parent, Nissan Motor Co.

NGRe is a single-parent captive of Nissan, one of the largest automakers in the world. In its role as a single-parent captive, NGRe provides Nissan with a host of insurance coverages in the United States and abroad.

The ratings of NGRe were upgraded based on AM Best’s assessment of NGRe’s balance sheet strength and the risks associated with its significant asset-backed securities (ABS) investments. The company’s sizable ABS investments originate at Nissan’s affiliated financing companies. Despite its substantial relative size, the underlying loans are considered of high credit quality and have been performing in accordance with expectations. These investments play an integral role in NGRe’s capital resources and generate substantial cash flows that also drive a principal source of earnings for NGRe. The investment and liquidity risks related to ABS also were incorporated into this rating assessment.

The rating agency also pointed out that as a member of the Nissan family of companies, NGRe benefits from the group’s proprietary data warehouse, extensive risk management practices and loss control programs.