OLDWICK, NJ, July 21, 2022–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Toyota Motor Insurance Company (TMIC) (Cedar Rapids, IA). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect TMIC’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
TMIC’s balance sheet strength is supported by its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), low underwriting and investment leverage ratios, excellent liquidity metrics and organic and steady surplus growth, reflecting favorable operating results, specifically over the past two years and into 2022. TMIC’s adequate operating performance assessment is supported by return metrics that outperform the industry on a five and 10-year average, as results continued to be positively impacted by the decline in frequency and severity trends in coverages, primarily driven by a reduction in vehicle use, as well as supply chain shortages, which subsequently increased the demand for used vehicles, thereby increasing sales and premiums written. TMIC’s neutral business profile benefits from its relationship with its US parent, Toyota Motor Credit Corporation (TMCC), partially offset by its dependence on TMCC and the same factors that may impact the auto industry adversely. The company’s appropriate ERM employs traditional risk management techniques specific to the auto industry, and TMIC benefits from TMCC’s enterprise-wide risk management approach to capital management, innovation and safety protocols.
The stable outlooks reflect AM Best’s expectation that TMIC will maintain its strongest level balance sheet strength assessment, adequate operating performance and neutral business profile without divergence from its risk profile as the auto market navigates through supply shortages and carbon neutrality.