LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” of Tryggingamidstodin hf. (TM) (Iceland). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect TM’s adequate risk-adjusted capitalisation, as well as its good competitive position within Iceland’s insurance market, with a relatively stable market share of over 25%. The company’s strong earnings track record, which remains highly reliant on potentially volatile investment income, is also taken into consideration.
A.M. Best expects TM’s risk-adjusted capitalisation to remain adequate and within the company’s economic capital targets, supported by good internal capital generation and comprehensive reinsurance cover. Risk-adjusted capitalisation is supported by a subordinated bond of ISK 2,026 million issued in 2015. A.M. Best’s assessment considers potential earnings volatility from the company’s predominantly Icelandic investment portfolio that primarily consists of listed and unlisted equities and fixed-income securities. A.M. Best expects the investment strategy to remain unchanged following the lifting of Iceland’s capital restrictions in March 2017.
TM has a track record of strong operating results, as demonstrated by a five-year average operating ratio of 74% (2012-2016). The strong operating result has remained dependent on investment income. The company’s underwriting profit improved in 2016, demonstrated by a combined ratio of 98% compared to 104% in 2015. The improvement was driven by strong results in the company’s marine and motor books of business.
TM benefits from a good market position within Iceland’s insurance market, as well as from its strong foothold and expertise in the local marine sector. Additionally, the company continues its efforts to develop its small international marine book, which currently represents 11% of gross written premium.
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