LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a” of LocalTapiola General Mutual Insurance Company (LocalTapiola) (Finland). The outlook for both ratings is stable.
The ratings reflect LocalTapiola’s strong risk-adjusted capitalisation, excellent business profile and improving technical performance.
Following the merger of Tapiola General Mutual Insurance Company and Local Insurance Mutual Company on Dec. 31, 2012, there has been a considerable re-organisation of the LocalTapiola group. In order to better service policyholders, a significant volume of insurance business, staff and capital has been successfully transferred between group entities. With the establishment of a new regional mutual company that will service policyholders in the Helsinki metropolitan area, along with a company that will provide administrative services to all group companies, the final aspects of LocalTapiola’s post-merger re-organisation are expected to be completed during 2015. Writing gross premiums of approximately EUR 1.1 billion, LocalTapiola is one of the largest insurance groups in Finland.
Despite substantial internal disruption, LocalTapiola performed well in both 2013 and 2014 to date. Moreover, partially as a result of reserve releases, low winter weather related losses and a decrease in economic activity due to the financial downturn, LocalTapiola generated its strongest ever underwriting performance during 2013, and reported a combined ratio of 91.5% (including discount expenses). The company’s combined ratio is expected to deteriorate from this level during 2014, representing more usual operating conditions. Financial savings following the merger are expected to be realised for the first time during 2015, as initial integration costs fall away and efficiencies are experienced. An increased focus on underwriting performance appears to be showing positive results and underwriting profits are expected to gradually improve over the longer term.
The risk-adjusted capitalisation of both LocalTapiola and the larger LocalTapiola group is strong and supportive of its business plans. Future growth in gross written premiums is likely to be supported by the retention of earnings. An offsetting factor to LocalTapiola’s rating is its limited financial flexibility as a mutual insurer.
Positive rating movements could occur if there were sustained improvements in the company’s underwriting performance and increased financial flexibility. Negative rating movements could occur if there were a material fall in the company’s risk adjusted capitalisation or a notable and continuous deterioration in underwriting performance.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilised:
• Catastrophe Analysis in A.M. Best Ratings
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding Universal BCAR
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
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