A.M. Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” of Enel Insurance N.V. (EINV) (Netherlands), a captive of Enel SpA (Enel), a multinational electric utility company based in Italy.
The outlook of these credit ratings is stable.
The ratings reflect EINV’s balance sheet strength, which A.M. Best categorised as very strong, as well as their adequate operating performance, neutral business profile and appropriate enterprise risk management.
EINV’s balance sheet strength assessment is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR).
The rating firm outlined that the captive maintains good liquidity, with investments composed almost entirely of fixed-income securities and cash funds.
A.M. Best described the offsetting rating factor is EINV’s high reliance on reinsurance, although they noted, risks associated with this dependence are mitigated partially by the captive’s use of reinsurers of excellent credit quality.
In 2019, technical results remained positive standing at €4.3 million, reporting a combined ratio of 96.3 percent. EINV’s underwriting performance over the past five years (2015 to 2019) compares positively with its targeted through-the-cycle combined ratio of 95 percent to 100 percent.
Prospectively, A.M. Best said it expects the captive to achieve near break-even underwriting results and low single-digit returns on equity.
A. M. Best suggested that as a single-parent captive, EINV is well-integrated within 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.
