A.M. Best has affirmed the financial strength rating of “A (Excellent)” and the issuer credit rating “a” of Eni Insurance (EIL).
The ratings reflect EIL’s strong underwriting profitability in recent years and excellent risk-adjusted capitalisation. The ratings also take into consideration the captive’s importance to the Eni Group, an energy company?, as a risk management tool.
These rating factors are partially offset by EIL’s exposure to peripheral European sovereign bonds.
In addition, EIL has exposure to potentially substantial underwriting losses, due to its large maximum line size, although, large losses will be moderated by comprehensive reinsurance.
EIL’s risk adjusted capitalisation is expected to remain excellent. Available capital surplus is likely to increase in 2015 due to a non-recurring return premium payment of €37 million to EIL from a reinsurance company, as well as good financial performance, subject to large loss experience the remainder of the year.
EIL reported a strong technical profit of €86.2 million in 2014, compared with €66.3 million in 2013, which equated a combined ratio of 52 percent, compared with 46 percent in 2013.
The reported pre-tax profit was €96.8 million, compared with €70 million in 2013.
Prospective performance is likely to remain volatile, due to potential large losses from EIL’s property account and unrealised gains/losses from its peripheral European sovereign bond portfolio.
In 2014, EIL increased its retention on its main reinsurance programme covering fire and property risks to $100 million per event, from $50 million. The programme is placed with a strong panel of reinsurers.
