AMSTERDAM--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Eni Insurance Designated Activity Company (EID) (Ireland), a captive of Eni S.p.A. (Eni), a multinational energy company based in Italy. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect EID’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
EID’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), is categorised as strongest, and AM Best expects it to remain at the strongest level over the medium term. An offsetting rating factor in the balance sheet assessment is EID’s reliance on reinsurance to write large risks; however, the risks associated with this reliance are mitigated partly by long-standing relationships with reinsurers of excellent credit quality.
EID has a track record of strong operating profits, evidenced by a five-year average combined ratio of 55.5% (2015-2019). In 2019, EID produced a pre-tax profit of EUR 75 million (2018: EUR 56 million), underpinned by a robust underwriting result. The combined ratio remained excellent at 59%, which represents a deterioration compared with 2018 (40%). The company’s underwriting performance remained strong during the first nine months of 2020 despite the COVID-19 pandemic. Prospective performance is subject to volatility due to potential large losses from EID’s property account. However, underwriting volatility should be moderated by the captive’s comprehensive reinsurance programme.
EID is well-integrated within the Eni Group’s risk management framework, and has an active role in overseeing and containing the group’s insurance costs. Additionally, the captive enables the group to centralise claims information and establish effective internal reporting for Eni. EID has a developed ERM framework, with clear risk appetite and tolerance levels in place.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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