OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has affirmed the financial strength rating (FSR) of B+ (Good) and the issuer credit rating (ICR) of “bbb-” of SOLID Forsakringsaktiebolag (Solid) (Sweden). The outlook for both ratings remains stable.
Solid maintains good risk-adjusted capitalisation. In 2008, capitalisation was supported by an injection from its parent company and by a reduction in intercompany loans. However, an offsetting factor continues to be Solid’s reliance on unrated reinsurance companies, particularly an unrated affiliated company based in Switzerland.
A.M. Best expects Solid’s profit before tax to marginally decrease in 2009 from a resilient SEK 60 million (USD 7.7 million) in 2008. At the same time, the combined ratio is likely to increase from 89.6% in 2008, as the expense ratio is expected to deteriorate driven by Solid’s expansion into new territories and the launch of new products. However, Solid benefits from low claims in its main extended warranty portfolio (approximately 80% of gross written premiums), although this business is also characterised by high commissions paid to distribution partners, which are mainly retailers and brokers.
Solid has established a strong niche position for extended warranty business in the Swedish market. Benefiting from this position and from an expansion into other specialty lines of business, gross written premiums are likely to grow marginally in 2009, from SEK 990 million (USD 127 million) in 2008.
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