AM Best Affirms Credit Ratings of Toyota Motor Insurance Company

AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Toyota Motor Insurance Company (TMIC) (Cedar Rapids, IA). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect TMIC’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

TMIC continues to maintain balance sheet strength at the strongest level supported by risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), low underwriting leverage, organic and steady growth of policyholders’ surplus, excellent liquidity with metrics outperforming the industry and positive cash flows. AM Best assesses the company’s operating performance as adequate and expects it to return to historical levels following the volatility in results, which is attributed to losses from its guaranteed auto protection (GAP) business and the rise in frequency and severity, mitigated by rate increases to address the issue.

Amid the COVID-19 pandemic, the overall weakening of the economy has caused demand of vehicle purchases to decline; therefore, the true effects of rate increases and underwriting initiatives on the company’s GAP business could take some time to be realized. TMIC’s neutral business profile supports the Toyota organization as a wholly owned subsidiary and single-parent captive of Toyota Motor Insurance Services, Inc., a California corporation. TMIC provides vehicle service agreements, GAP agreements, excess wear and use coverage, and tire and wheel protection coverage for Toyota, Lexus, and Mazda customers, dealers and affiliated companies. AM Best considers TMIC’s ERM to be appropriate, as the captive has leveraged the robust and formal corporate management practices that have been established and implemented by its U.S. parent, Toyota Motor Credit Corporation.

The stable outlooks reflect AM Best’s expectation that the company will maintain its balance sheet strength assessment at strongest and adequate level of operating performance, while managing its volatile GAP product line and neutral business profile without divergence from its risk profile.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit

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