Yasuda Fire & Marine Insurance Co. and Nissan Fire & Marine Insurance Co. merged Monday to form Japan’s second-largest nonlife insurer, Sompo Japan Insurance Inc.

The two firms had combined net premium revenues of 1.193 trillion yen as of March 31, putting the new firm behind Japan’s biggest nonlife insurer, Millea Holdings Inc.

“As a professional with regard to risks and forming assets, we’ll take a step forward toward forming a corporate group that represents Japan,” President Hiroshi Hirano said in a ceremony marking the creation of Sompo Japan.

The merger is the latest in a series of business reorganizations in Japan’s nonlife insurance industry, following the April 1 business integration of Tokio Marine & Fire Insurance Co. and Nichido Fire & Marine Insurance Co. into Millea Holdings and the merger of Sumitomo Marine & Fire Insurance Co. and Mitsui Marine & Fire Insurance Co. into Mitsui Sumitomo Insurance Co. on Oct. 1, 2001.

Yasuda and Nissan had initially planned to merge in April along with Taisei Fire & Marine Insurance Co., but the plan fell through after Taisei collapsed in November due to massive reinsurance claims resulting from the Sept. 11 terrorist attacks on the United States.

Taisei is scheduled to spin off its reinsurance division so that its domestic insurance business will be taken over by Sompo Japan by the end of the year.

Sompo at AA-minus

Standard & Poor’s Corp. said Monday it has assigned financial strength and long-term credit ratings of AA-minus to Sompo Japan Insurance Inc., which was created the same day through the merger of Yasuda Fire & Marine Insurance Co. and Nissan Fire & Marine Insurance Co.

The outlook on the long-term rating for Japan’s second-largest nonlife insurer has been set at negative, the U.S.-based credit-rating agency said.

The ratings are based on the company’s “extremely strong business position, strong underwriting performance, good asset quality and strong capitalization,” it said.

However, it added, “These strengths are offset to some extent by the increasingly competitive operating environment in Japan’s nonlife (casualty insurance) industry.”

S&P at the same time assigned its A-plus financial strength ratings to Sompo Japan’s three subsidiaries: Sompo Japan Insurance Co. of America, Sompo Japan Insurance Co. of Europe Ltd. and Sompo Japan Insurance Co. (Asia) Pte Ltd.

It also assigned its A-plus financial strength and long-term credit ratings to Sompo Japan Himawari Life Insurance Co., formerly Yasuda Kasai Himawari Life, with a negative outlook.

It affirmed the BBBpi rating on Nissan Insurance Co. (Europe) Ltd. and the AA financial strength and financial enhancement ratings on Sompo Japan Financial Guarantee Insurance Co.

Nisshin Fire rated

Standard & Poor’s Corp. on Monday assigned its BBB minus financial strength and long-term counterparty credit ratings to Nisshin Fire & Marine Insurance Co., citing worsening operating performance and intensifying competition.

The outlook on the long-term rating is negative, the U.S. credit-rating agency said.

S&P commended the insurer for following appropriate business strategies including focusing on the household market, small-to-midsize enterprises and some large groups, such as police organizations.

But the insurer’s overall operating performance “has significantly worsened, primarily as a result of a sharp increase in asset evaluation losses on securities and additional voluntary early retirement costs,” it said.

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