Moody’s Japan has questioned Tokio Marine’s overseas expansion, warning the company’s credit standing is exposed to increased risk.

The ratings agency says Tokio Marine and Nichido Fire Insurance may dilute its strong homegrown credit profile and improving financial leverage.

Tokio Marine earns a quarter of its revenue outside Japan. Moody’s says further foreign acquisitions will challenge the company’s ability to manage a growing overseas business alongside its strong domestic franchise.

Moves into other Asian countries might require higher investment and so may not be as profitable as past acquisitions.

Tokio Marine has so far concentrated on diversifying into the UK and US. Moody’s rates these moves as credit neutral to slightly negative.

It says an insurer moving into a new market needs to have underwriting expertise and franchise strength to integrate its new business and operate it across insurance cycles.