AM Best has removed from under review with negative implications and affirmed the financial strength rating of B++ (good) and the long-term issuer credit rating of bbb+ (good) of Sigurd Rück AG. The ratings reflect Sigurd’s balance sheet strength, which AM Best finds to be very strong, in addition to its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings factor, in the form of drag, Sigurd’s association with its parent company Saipem. Sigurd is a captive reinsurer of Saipem and a key element of the group’s risk management framework. The rating action reflects the improvement in Saipem’s credit profile, following the completion of a capital injection in the form of a rights issue in July 2022. According to AM Best, Sigurd has significant exposure to the credit risk associated with Saipem, notably through a cash-pooling agreement with the group. On 31 December 2021, Sigurd’s funds allocated to the cash-pooling with Saipem represented 59.8 per cent and 78.6 per cent of the company’s total assets and capital and surplus, respectively. AM Best expects these ratios to decrease in the second half of 2022 as Sigurd rebalances its investment portfolio in an effort to actively reduce its credit exposure to Saipem. The cash-pooling agreement is considered a partially offsetting factor to Sigurd’s very strong balance sheet strength assessment, says the rating agency. The company’s balance sheet strength remains underpinned by its risk-adjusted capitalisation, which is comfortably above the minimum required for the strongest assessment, as measured by Best’s Capital Adequacy Ratio.
