Nissan’s Bermudian-based captive insurer has seen the outlook on its credit ratings lowered to negative from stable by AM Best after a five-year period in which the dividends it paid to its parent company exceeded its earnings.

However, Nissan Global Reinsurance’s financial strength rating of A- (excellent) and its long-term issuer credit rating of “a-” (excellent) were affirmed by AM Best.

The rating agency said the negative outlook reflected AM Best’s expectation that the Japanese carmaker parent company will “continue to experience negative pressure driven by global economic conditions and the recently enacted US tariff policy”.

Nissan, like other Japanese carmakers, is dealing with the negative impact from tariffs imposed by US president Donald Trump. After negotiations the tariffs were lowered to 15 per cent from an initial 27.5 per cent rate — but still well above the previous 2.5 per cent rate.

The ratings announcement came ahead of Nissan reported its first quarterly net profit in two years as sales for the quarter ended June 30 rose 9.5 per cent compared to the same period last year.

AM Best said the captive’s credit ratings reflected its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

NGRe remains an “integral component of the business plan and risk management framework of its parent”, AM Best added.

The ratings agency added: “While NGRe consistently has generated strong annual earnings, its total surplus has declined over the past five years as dividends returned to the parent have exceeded those earnings.

“However, the captive maintains sufficient liquidity, supported by positive cash flows from its selected risks and exposures. NGRe’s operating performance assessment of adequate reflects consistent favourable annual combined and operating ratios over the last five years.”

NGRe provides Nissan with a wide range of insurance coverages in the United States and elsewhere, including extended service contracts, product liability and inland marine, AM Best added.