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) (Chandler, AZ). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect TMIC’s balance sheet strength, which AM Best assesses at the strongest level, 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, supported by solid operating earnings. TMIC’s adequate operating performance assessment stems from its highly specialized niche business and its solid overall profitability in recent years. During the most recent five years, profitability levels were enhanced by the pandemic and pandemic-related circumstances such as less miles driven and higher residual values on used cars. During 2023 and continuing into 2024, the company has experienced increasing claims, which have approached more historical levels and as a result, profitability has moderated accordingly.

TMIC’s neutral business profile benefits from its relationship with its U.S. parent, Toyota Motor Credit Corporation (TMCC), partially offset by its dependence on TMCC and the same factors that may adversely impact the auto industry. The company’s appropriate ERM framework incorporates 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.

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