A.M. Best has affirmed the financial strength and issuer credit ratings of Evergreen Insurance Company (EICL) in Bermuda.
The affirmed “A (Excellent)” for financial strength and “a” for issuer credit reflect EICL’s strong risk-adjusted capitalisation, its contribution to the risk management of the Evergreen Group and a track record of underwriting results.
EICL is a pure captive of the Evergreen Group and is the group’s risk management platform. It underwrites risks in marine, aviation, property, engineering, motor and other liability in relation to group operations.
According to A.M. Best, the ratings also recognise EICL’s prudent investment strategy and liquidity position.
Offsetting rating factors include EICL’s declining trend in its absolute capitalisation over the past five years. A.M. Best believes that this is due to dividend payments made to the group exceeding profits it generated despite no dividend payment in 2014.
EICL expects growth in the number of insured vessels and aircrafts for the Evergreen Group, which will require capital support at EICL.
The company’s Best’s Capital Adequacy Ratio (BCAR) is sensitive to a single catastrophic aviation loss scenario, according to A.M. Best, which could give rise to a substantial credit or dispute risk associated with a potentially large reinsurance recoverable relative to its capital size.
A.M. Best believes that upward rating movement is unlikely in the near term, but a downward rating movement could occur if the declining trend in absolute capitalisation continues.
