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Fitch: Sompo Japan Nipponkoa's Ratings Unchanged by Endurance Acquisition
October 6, 2016 / 2:47 AM / in a year

Fitch: Sompo Japan Nipponkoa's Ratings Unchanged by Endurance Acquisition

(The following statement was released by the rating agency) TOKYO/HONG KONG, October 05 (Fitch) Sompo Japan Nipponkoa Insurance Inc's (Sompo Japan Nipponkoa) Long-Term Issuer Default Rating and Insurer Financial Strength Rating of 'A' will not be affected by the proposed acquisition of US-based Endurance Speciality Holdings Ltd. (Endurance), says Fitch Ratings. Sompo Holdings, Inc. (SOMPO), the parent of Sompo Japan Nipponkoa, announced its plans to acquire Endurance on 5 October 2016. Fitch believes the estimated acquisition costs of about JPY638bn are manageable compared with SOMPO's net assets of JPY1.7trn, shareholders' equity of JPY839bn and cash and equivalents of JPY551bn at end-March 2016. Fitch expects the deal to be positive for SOMPO's credit profile over the medium term due to Endurance's extensive franchise in the US non-life insurance markets, solid underwriting expertise and strong capitalisation. Endurance, which focuses on agriculture and speciality insurances, such as directors and officers liability insurance, cyber insurance and professional lines, will help SOMPO diversify its risk profile and raise overseas earnings as a share of the Japanese group's revenue. SOMPO estimates that the acquisition will enhance its global diversification by increasing its overseas adjusted consolidated profit to 29% or more of the group's total profit in the financial year ending March 2019 (FYE19), compared with 12% in FYE16. Fitch deems any negative effects on SOMPO's capital adequacy or leverage is likely to be manageable. Sompo Japan Nipponkoa's IFS Rating is constrained by Japan's sovereign rating of 'A'/Negative. Fitch does not believe SOMPO currently has sufficient international diversification to counterbalance its large holding of Japanese government debt. The agency assesses Sompo Japan Nipponkoa's unadjusted IFS Rating at 'A+' without the constraint from Japan's sovereign rating. The transaction is subject to conditions, including the receipt of regulatory approval in Japan, the US and other regions. Contact: Teruki Morinaga Director +81 3 3288 2781 Fitch Ratings Japan Limited Kojimachi Crystal City East Wing 3F 4-8 Kojimachi, Chiyoda-ku Tokyo 102-0083, Japan Akane Nishizaki Associate Director +852 2263 9943 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available on www.fitchratings.com ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. 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Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

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