AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent) of Eni Insurance Designated Activity Company (EID) (Ireland), a captive of Eni S.p.A. (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 AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). EID’s risk-adjusted capitalisation is assessed at the strongest level, as measured by AM Best’s Capital Adequacy Ratio (BCAR) and AM Best expects it to remain at this level prospectively. According to the ratings company, an offsetting factor in the balance sheet strength assessment is EID’s reliance on reinsurance to underwrite large risks. However, the risks associated with this reliance are mitigated partly by long-standing relationships with reinsurers of excellent credit quality. AM Best adds that EID has a track record of strong operating profits, demonstrated by a five-year weighted average combined ratio of 50.7 per cent (2017-2021) and that the company’s underwriting performance has remained strong during the first nine months of 2022. Prospective performance is subject to volatility due to potential large losses from EID’s property account, says AM Best. However, underwriting volatility on a net basis should be moderated by the captive’s comprehensive reinsurance programme.
