A.M. Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” of Eni Insurance Designated Activity Company (EID) (Ireland), a captive of Eni, a multinational energy company based in Italy. The outlook of these credit ratings is stable.
The ratings reflect EID’s balance sheet strength, which have been characterised as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
EID’s risk-adjusted capitalisation, as measured by best’s capital adequacy ratio is categorised as strongest and is expected to remain at the strongest level over the medium term.
An offsetting rating factor in the balance sheet assessment is EID’s reliance on reinsurance to write large risks; however, the risks associated with this reliance are mitigated partly by long-standing relationships with reinsures of excellent credit quality.
EID has a track record of strong operating profits, evidenced by a five-year average combined ratio of 54.2 percent between 2014 and 2018.
In 2018, EID produced a pre-tax profit of €56 million (2017: €40 million), underpinned by a robust underwriting result. The combined ratio remained excellent at 40 percent, which represents an improvement compared with 2017 (49 percent).
The prospective performance is subject to volatility due to potential large losses from EID’s property account. However, underwriting volatility should be moderated by the captive’s comprehensive reinsurance programme.
Their captive enables the group to centralise claims information and establish effective internal reporting for Eni. EID has a developed ERM framework, with clear risk appetite and tolerance levels in place.