AM Best has affirmed the ‘A-’ (Excellent) financial strength rating and the ‘a-’ (Excellent) long-term issuer credit rating of Saipem S.p.A.’s captive, Sigurd Rück, with the outlook of these credit ratings assessed as ‘stable’. Best cites the ratings as indicative of Sigurd’s very strong balance sheet, with its strong operating performance, neutral business profile, and appropriate enterprise risk management also factoring into its assessment. However, the ratings take into account the drag caused by Sigurd’s association with its parent company, although the captive reinsurer is a key element of the Sapiem group’s risk management framework, according to Best. The agency outlines Sigurd’s very strong balance sheet strength as being underpinned by its strongest level of risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, with the agency expecting it to remain comfortably at the strongest level, supported by low net underwriting risk, in addition to good earnings retention. Furthermore, Best says the captive’s retrocession programme with retrocessionaires of superior credit quality is responsible for the partial mitigation of moderate exposure to potential catastrophe losses. Despite this, Sigurd faces concentration and credit risk due to a cash-pooling agreement with the Saipem group, which the agency deems as a partially offsetting factor in its assessment of the captive. The funds Sigurd allocated to the cash-pooling account for 49 per cent and 60 per cent of its total assets and capital and surplus, respectively, as of 31 December 2024. Between 2020 and 2024, Sigurd recorded a strong operating performance, with a weighted average return-on-equity of 11.9 per cent and a combined ratio of 65.6 per cent, as per Best’s calculations. The business profile of Sigurd benefits from its important role as a risk management tool for its parent company, in conjunction with moderate geographic and product diversification derived from Saipem’s broad commercial activities. Best expects the captive to retain its position as a key tool for Saipem for the foreseeable future.
