LONDON--(BUSINESS WIRE)--A.M. Best has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of “a-” to Enel Insurance N.V. (Enel Insurance) (Netherlands), a captive of Enel S.p.A. (Enel Group), a multi-national electric utility company in Italy. The outlook assigned to both ratings is stable.
The ratings reflect Enel Insurance’s strong consolidated risk-adjusted capitalisation, a robust, albeit volatile, performance record and the captive’s importance within Enel Group’s risk management framework. Partially offsetting these strengths is Enel Insurance’s relatively high exposure to Italian sovereign bonds, which represented 20% of total invested assets at year-end 2014. The captive is in the process of reducing those holdings. In addition, Enel Insurance could incur substantial underwriting losses, due to its large maximum line size. This risk is somewhat mitigated by an extensive reinsurance programme, which is placed with a panel of financially strong reinsurers.
Enel Insurance’s consolidated risk-adjusted capitalisation is likely to remain strong in 2015, underpinned by good internal capital generation and moderate net retention. Enel Insurance’s consolidated capital base increased by about 10% to EUR 197.9 million in 2014, driven by good operating results. The captive’s investment earnings have made a material contribution to overall profits in each of the past three years.
The captive is a key part of Enel Group’s overall risk management framework. Its primary objective is to mitigate the group’s exposure to property/casualty risks.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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