LONDON--(BUSINESS WIRE)--A.M. Best has removed from under review with negative implications and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of SCHWARZMEER UND OSTSEE Versicherungs-Aktiengesellschaft (SOVAG) (Germany). The outlook assigned to these Credit Ratings (ratings) is negative.
The ratings reflect SOVAG’s solid risk-adjusted capitalisation and strong liquidity profile. SOVAG’s financial strength was enhanced in February 2017 by a material capital contribution from its shareholders, which include GAZPROM Germania GmbH, INSURANCE COMPANY OF GAZ INDUSTRY SOGAZ and Volga Resources Investments S.A. This was the third capital contribution over the past 15 months and was required to replenish the company’s capital base following operating losses. SOVAG continues to adjust its financial risk profile in an effort to maintain solid risk-adjusted capitalisation.
SOVAG’s underwriting performance has been weak, as demonstrated by a five-year average combined ratio of over 120% (2011-2016). A.M. Best expects prospective operating performance to be adversely impacted by an increase in expenses and poor technical results.
The negative outlooks reflect considerable uncertainty with regard to SOVAG’s ability to improve its financial performance and maintain solid risk-adjusted capitalisation.
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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