Sigurd Rock, the captive reinsurer of global energy provider Saipem, has had its financial strength rating of A- (Excellent) and its long-term issuer credit rating of “a-” affirmed by A.M. Best.
The outlook of the Switzerland-based captive’s rating remains stable.
The ratings are a reflection of Sigurd’s “very strong” balance sheet strength, in addition to its strong operating performance, neutral business profile, and appropriate enterprise risk management.
There was also a rating drag due to the captive’s association with its parent company Saipem.
The ratings agency expects Sigurd’s risk-adjusted capitalisation to remain at the strongest level underpinned by internal capital generation, and supported by the captive’s conservative investment and reserving policies, its moderate exposure to catastrophe losses and a comprehensive retrocession programme.
Factors offsetting the ratings partially is Sigurd’s relatively small capital base, which exposes its risk-adjusted capitalisation to a degree of volatility, and a cash pooling agreement in place with the Saipem group, which creates concentration risk within the company’s asset portfolio.
The captive’s strong earnings have been driven by its underwriting account, which has produced a five-year weighted average combined ratio of 54 percent, down 1 percent from 2017.
The average five-year return, between 2013 and 2017, is 17 percent.
A.M. Best expects the captive to maintain a strong level of profitability, despite its prospective performance being likely to deteriorate “due to decreasing premium rates and declining premium volumes from challenging market conditions affecting the Saipem group”.
