OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a+” of Electric Insurance Company (EIC) (Beverly, MA) and its wholly owned subsidiary, Electric Insurance Ireland Designated Activity Company (EIIDAC) (Dublin, Ireland). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect EIC’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. The ratings also take into consideration the value-added commercial insurance services provided to General Electric Company (GE) and EIC’s strategic importance to GE.
EIC’s balance sheet strength assessment is underpinned by its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The company maintains a conservative reserving approach, consistently favorable calendar-year and accident-year development. The company provides commercial lines coverage to GE, and personal lines coverage to GE’s current and former employees, as well as the general public.
The ratings of EIIDAC reflect its affiliation with EIC and its integration into EIC’s business plan, as well as its supportive capitalization and strategic role in providing commercial lines products to GE in the European Union. In addition, EIIDAC cedes a majority of its business to EIC through an excess of loss contract.
Partially offsetting these positive rating factors are the limitations on EIC’s commercial lines business to one policyholder, GE. However, most commercial lines are priced retrospectively, contributing to reduced risk and steady earnings. While retrospective pricing features in commercial policies limit the earnings potential of an insurance company, this also protects a company from excessive loss by allowing it to charge back losses through premium adjustments. Although EIC’s largest line of business is workers’ compensation, its exposure is diminished materially by reinsurance protections, including the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA), which was renewed in 2020.
The ratings may come under negative pressure if there is a material weakening in risk-adjusted capital or a reduction in EIC’s strategic importance to GE. The ratings may also come under pressure if company’s overall business profile weakens. A deterioration in GE’s credit profile also could impact the company’s ratings negatively.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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