LONDON--(BUSINESS WIRE)--A.M. Best has assigned the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” to Sigurd Rück AG (Sigurd) (Switzerland). The outlook assigned to these Credit Ratings (ratings) is stable.
Sigurd is a captive reinsurer of Saipem S.p.A. (Saipem), an Italian multinational group that provides services to the oil and gas sector, including procurement, construction and installation of pipelines, as well as drilling.
The ratings of Sigurd reflect the company’s excellent risk-adjusted capitalisation, very strong operating performance and its importance as a risk management tool for the Saipem group.
Sigurd’s risk-adjusted capitalisation is excellent and is supported by strong internal capital generation, conservative investment and reserving policies, a moderate exposure to catastrophe losses, as well as a comprehensive retrocession programme. A partly offsetting factor is represented by Sigurd’s relatively small capital base, which exposes its risk-adjusted capitalisation to some degree of volatility. Furthermore, a cash pooling agreement in place with the Saipem group exposes Sigurd’s assets to a certain degree of concentration risk.
Sigurd has a track record of very strong operating results, as demonstrated by an average five-year return on capital of 22%. The company’s profitability is chiefly driven by its underwriting account, which has produced an excellent five-year average combined ratio of 54% (2011-2015). Prospectively, Sigurd’s operating performance is likely to deteriorate as a result of decreasing premium rates and challenging market conditions affecting the Saipem group, although A.M. Best expects the captive to maintain a good level of profitability.
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.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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