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Tokio Marine benefits from Japanese Sovereign upgrade

Japan’s improving economy has sparked an upgrade in the financial strength and debt ratings of Tokio Marine & Nichido Fire Insurance Co Ltd from AA- to AA.

Rating agency Standard & Poor’s (S&P) announced the upgrade after it raised its Japanese sovereign debt ratings to AA, the third-highest grade.

In a statement, S&P said the ratings on Tokio Marine, and its subsidiaries, have been “constrained by the long-term sovereign rating as both insurers' business franchises and asset compositions are highly concentrated in Japan”.

The rating agency added: “The outlook on the ratings on each company is stable. The companies are highly likely to maintain strong credit quality, underpinned by their very strong financial profiles or their support from their affiliated groups.”

S&P did say, however, that there is “little likelihood” that the outlook and ratings would be increased beyond that of Japan’s own ratings because of the correlation.

The Yen climbed against the Euro today following the sovereign upgrade. S&P said the country’s banking system was now in “good health” and its economy was likely to grow by around two percent per annum.

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