AMSTERDAM--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Société Hospitalière d’Assurances Mutuelles (Sham) (France). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Sham’s 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.
Sham’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects Sham’s risk-adjusted capitalisation to remain at the strongest level through the medium term. The company benefits from a liquid investment portfolio composed of high quality assets and its history of prudent reserving. Offsetting factors in the balance sheet strength assessment include a high dependence on reinsurance, with the company ceding more than 60% of its gross written premium in 2020. Sham’s longstanding relationship with its reinsurance panel of high quality somewhat mitigate the risks associated with this dependence.
Sham’s adequate operating performance assessment is supported by an average non-life combined ratio of 108.2% for the five-year period ending in 2020. In 2020, the group reported a net loss of EUR 2.9 million (2019: EUR 5.7 million loss), with technical losses partly offset by net investment income and realised gains. The company has a track record of establishing very conservative reserves, which contribute to positive reserve development in future years. In 2020, the company established prudent provisions for claims related to the COVID-19 pandemic. Through 2021, actual COVID-19-related losses remain significantly lower than what was provisioned.
Sham’s neutral business profile assessment is supported by its established position in the French medical professional liability insurance market, where its market share is above 50%. Since 2016, the group has expanded beyond France, establishing significant positions in Spain and Italy, and more recently entering the German market. The company rebranded as Relyens in 2018 to reflect its more international profile. The expansion into new markets provides an important level of geographic diversification, with the new markets accounting for more than half of the company’s gross earned premium in 2020. Concurrent with the expansion of its operations, the company has made significant investments in developing its offering, with the long-term goal of providing members with comprehensive risk management solutions, which management believes will lead to new revenue sources.
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