The financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” of Enel Insurance (EINV), the captive of multinational electric utility company Enel, has been affirmed by A.M. Best.
The outlook of these ratings remains stable.
The ratings are reflective of EINV’s balance sheet strength, which is categorised as very strong, in addition to its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The balance sheet assessment is supported by the strongest level of risk-adjusted capitalisation, according to Best’s Capital Adequacy Ratio.
The liquidity of the captive remains good, with investments made up almost entirely of fixed-income securities and cash funds.
A factor offsetting the ratings is EINV’s high reliance on reinsurance, although the risks associated with this dependence are partially mitigated by the captive’s use of reinsurers of excellent credit quality.
The captive generated an underwriting loss of approximately €10 million in 2017, driven primarily by reserve strengthening on its property book.
Over the past five years, however, EINV’s underwriting performance over the period between 2013 and 2017 compares positively with its targeted through-the-cycle combined ratio.
A.M. Best expects the captive will achieve near break-even underwriting results and a low-single-digit return on equity in future years.
EINV is a well-integrated part of the Enel group and plays a fundamental role in managing the group’s risk exposures.
The captive’s risk management capabilities are in line with its risk profile.
