AM Best Affirms Credit Ratings of DTRIC Insurance Company, Limited and DTRIC Insurance Underwriters, Limited

HONG KONG–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating (FSR) of A-
(Excellent) and the Long-Term Issuer Credit Ratings of “a-” of DTRIC
Insurance Company, Limited (DTRIC), and its reinsured affiliate,
DTRIC Insurance Underwriters, Limited. The outlook of these Credit
Ratings (ratings) is stable. Both companies are domiciled in Honolulu,
HI.

The ratings reflect DTRIC’s balance sheet strength, which AM Best
categorizes as strong, as well as its marginal operating performance,
limited business profile and appropriate enterprise risk management. The
ratings also consider the impact of implicit and explicit support given
by Aioi Nissay Dowa Insurance Company Limited, a member of MS&AD
Insurance Group Holdings, Inc., to DTRIC. Aioi Nissay Dowa Insurance
Company Limited has an FSR of A+ (Superior) and is a Financial Class
Size XV ($2 billion or greater).

DTRIC’s risk-adjusted capitalization, as measured by Best’s Capital
Adequacy Ratio (BCAR), remains at a strong level, underpinned by
moderate underwriting leverage and an investment portfolio that is
concentrated largely on low-risk and liquid assets. However, under the
company’s current reinsurance program, its net exposure to a potential
loss from catastrophes remains a significant risk factor. This risk has
placed some strain on the company’s balance sheet assessment.

DTRIC’s operating performance on a five-year average basis is marginal,
with key operating metrics lagging its peers’ averages. This is
underpinned by its history of weak underwriting results as demonstrated
by a five-year average combined ratio of approximately 104%. In
response, DTRIC has implemented various measures to remediate the
performance of its underwriting portfolio. AM Best notes that company
also has taken initiatives to mitigate the potential impact arising from
recent tax reforms.

DTRIC is a general insurer that operates only in Hawaii. As a relatively
small local insurer, the company holds an overall market share of less
than 3%. DTRIC mainly specializes in workers’ compensation, personal
automobile insurance and a number of other commercial line products.
There is no significant concentration in its product mix, but the
company’s narrow geographic focus is a major factor that has constrained
its business profile assessment.

The stable outlooks reflect AM Best’s expectation that DTRIC will
maintain positive operating results over the short to medium term,
supported by stable revenue growth and a combined ratio that is expected
to improve gradually over time.

While positive rating actions are unlikely in the near term, negative
rating actions could occur if there is significant deterioration in
DTRIC’s risk-adjusted capitalization due to unexpected capital
repatriation, or if its profitability falls below AM Best’s expectation
due to competitive pressure or adverse claims experience.

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

This press release relates to Credit Ratings that have been published
on AM 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 AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

Maggie Wu
Associate Financial Analyst
+852
2827 3421
maggie.wu@ambest.com

Christopher
Sharkey
Manager, Public Relations
+1 908 439
2200, ext. 5159
christopher.sharkey@ambest.com

Jason
Shum
Associate Director, Analytics
+852 2827 3424
jason.shum@ambest.com

Jim
Peavy
Director, Public Relations
+1 908 439
2200, ext. 5644
james.peavy@ambest.com