AM Best has downgraded the credit ratings of Nissan Global Reinsurance Ltd, the Bermudian captive of Nissan Motor Co Ltd, the Japanese automaker.

The agency lowered NGRe’s Financial Strength Rating to A- (Excellent) from A (Excellent) and its Long-Term Issuer Credit Rating to “a-” (Excellent) from “a” (Excellent). Both ratings carry a stable outlook.

The move reflects what AM Best described as “moderate weakening” in the credit profile of the parent company, driven by global economic conditions and recent American tariffs.

Despite the downgrade, the agency noted NGRe maintains “very strong” balance sheet strength, with the strongest level of risk-adjusted capitalisation as measured by Best’s Capital Adequacy Ratio. The captive also continues to play a key role in Nissan’s global business strategy and risk management framework.

While NGRe has posted consistent annual profits, AM Best pointed out that its surplus has declined over the past five years, with dividends to its parent exceeding earnings. Nevertheless, the company has enough cash on hand thanks to its insurance exposures.

As Nissan’s captive, NGRe provides coverage ranging from extended service contracts and product liability to inland marine risks, both in the United States and overseas. The company also benefits from Nissan’s proprietary data warehouse, risk management and loss control programmes.

AM Best said a downgrade could result if NGRe loses capital or if it gives out too much in dividends. On the other hand, an upgrade could happen if the company keeps showing stronger results over time, though that is unlikely in the near future, AM Best said.