A.M. Best Affirms Ratings of Euler Hermes American Credit Indemnity Company

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit rating (ICR) of “aa-” of Euler Hermes American Credit Indemnity Company (Euler Hermes ACI) (Owings Mills, MD). The outlook for both ratings is stable.

The ratings reflect Euler Hermes ACI’s strong capitalization; effective risk management and risk reduction (which reduced total potential exposure and helped to mitigate some of the adverse effects of the credit crisis); strong pre-crisis operating performance; and leading market position as the largest trade accounts receivable insurer in the United States. The rating also reflects the implicit support provided by its group, which is comprised of its ultimate parent, Allianz Societas Europaea (Allianz SE) (Germany), intermediate parent Euler Hermes S.A. (France) and affiliates, given ownership, reinsurance protection, infrastructure integration, enhanced marketing capabilities and financial flexibility.

These positive rating factors are partially offset by the negative impact of the credit crisis, resulting in weakened operating results and a noteworthy drop in Euler Hermes ACI’s risk-adjusted capitalization in 2009, driven by dividends to the parent, high frequency of losses, adverse development and materially lower ceding commissions. Also, the credit insurance industry is highly correlated to bankruptcies and default rates.

The outlook reflects A.M. Best’s expectation that, despite the continued recession, Euler Hermes ACI’s strong risk-adjusted capitalization, utilization of high quality reinsurers, support from Allianz SE and the group and effective risk management will sustain the rating over the long term.

Euler Hermes ACI is a wholly owned subsidiary of Euler Hermes ACI Holding, Inc (Wilmington, DE), which in turn is a wholly owned subsidiary of Euler Hermes S.A., a global leader in accounts receivable insurance with global market share of over 35%. Euler Hermes S.A. is ultimately owned by Allianz SE.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.