LONDON--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” to Fortegra Europe Insurance Company Limited (FEI) (Malta). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect FEI’s balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. FEI’s ratings benefit from the support of its parent, Fortegra Financial Corporation (FFC) group.
FEI is a Malta-incorporated start-up subsidiary of FFC, a U.S. insurance group specialising in credit and warranty business. The company was established in 2018 to write warranty and specialty motor insurance business in several European markets.
The company’s initial risk-adjusted capitalisation is assessed at the strongest level, according to Best’s Capital Adequacy Ratio (BCAR), supported by original capital of EUR 6.5 million. Risk to the company’s balance sheet is limited as invested assets are allocated to money market funds. AM Best expects the company’s prospective capital position to weaken over the next three years as it assumes risk; however, risk-adjusted capitalisation is expected to remain at the strongest level, as measured by BCAR, supported by a further capital injection from FFC during the start-up phase.
FEI is expected to use retail intermediaries and brokers to distribute its products. FEI will benefit from the underwriting expertise of the group, which has a long-term record of profitable insurance results in the U.S. The group has a strong understanding of products that will be underwritten by FEI and has acquired European industry expertise to support its new operation. FEI’s significant reliance on a number of outsourcing partners represents a source of risk, which it aims to mitigate through careful selection, management and monitoring.
The ratings of FEI benefit from the support of its parent, FFC. FEI is expected to play a strategically important role in expanding the operations of FCC into Europe. FEI shares branding and management with its parent. FFC’s support is demonstrated by the initial capitalisation of FEI and the expectation that it will provide further capital to support the company during the five-year start-up phase.
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