LONDON--(BUSINESS WIRE)--A.M. Best has revised the outlook to positive from stable and affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit rating (ICR) of “a-” of Zavarovalnica Triglav d.d. (Triglav) (Slovenia), the operating holding company of the Triglav group.
Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of “a-” of Pozavarovalnica Triglav Re d.d. Ljubljana (Triglav Re) (Slovenia), the wholly owned subsidiary of Triglav. The outlook for these ratings is stable.
The revised outlook on the ratings of Triglav reflects its consistently excellent technical performance, as demonstrated by the five-year average combined ratio of 89.8%, which is underpinned by management’s focus on profitability through quality risk selection and underwriting discipline. These strong results follow a change in strategy in 2010, to scale back on its aggressive growth. Prior to 2010, the group maintained combined ratios of approximately 100%. Despite the challenging economic and insurance market conditions in Slovenia, A.M. Best believes that Triglav’s technical earnings are likely to remain strong, supported by its excellent business profile. Triglav benefits from a dominant competitive position, with a 37% share of the domestic market and strong brand recognition across Southeast Europe.
The ratings also reflect Triglav’s strong consolidated risk-adjusted capitalisation, which has been sustained by retained earnings and a contraction in net written premium in response to softening market conditions in Slovenia.
The affirmation of Triglav Re’s ratings reflects its importance to the group’s strategy as the licensed reinsurer of the group. In addition to business derived from the global reinsurance market, which accounted for approximately 4% of Triglav’s consolidated gross written premium of EUR 901 million in 2013, Triglav Re provides reinsurance capacity to all group companies.
Positive rating actions could occur if Triglav continues to produce excellent underwriting results, whilst maintaining a supportive level of risk-adjusted capitalisation, on a consolidated and stand-alone basis. Additionally, further development of Triglav’s enterprise risk management would support upward ratings movement. These factors will be assessed over the next 24 to 36 months. For Triglav Re, positive rating actions could occur if the company were to maintain its solid technical results and strengthen its stand-alone risk-adjusted capitalisation as it expands.
Negative rating pressures could arise from a prolonged weakening in Triglav’s operating performance, particularly in relation to its expansion outside of Slovenia. Additionally, for Triglav Re, negative rating actions could occur if risk-adjusted capitalisation were to weaken to an unsupportive level. Deterioration in the economic conditions in Slovenia could also result in negative rating actions for the Triglav group of companies.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilised:
• Analyzing Insurance Holding Company Liquidity
• Catastrophe Analysis in A.M. Best Ratings
• Equity Credit for Hybrid Securities
• Evaluating Non-Insurance Ultimate Parents
• Evaluating Country Risk
• Insurance Holding Company and Debt Ratings
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding BCAR for Life/Health Insurers
• Understanding BCAR for Property/Casualty Insurers
• Understanding Universal BCAR - A.M. Best's Capital Adequacy Ratio for Insurers
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
This rating announcement has been issued by A.M. Best Europe – Rating Services Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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