LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Sigurd Rück AG (Sigurd) (Switzerland). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Sigurd’s balance sheet strength, which is categorised as very strong by AM Best, as well as its strong operating performance, neutral business profile, and appropriate enterprise risk management (ERM), as well as rating drag due to its association with its parent company, Saipem S.p.A.
Sigurd is the captive reinsurer of Saipem, a global solution provider in engineering, drilling and construction of major projects in the energy and infrastructure sectors, present in over 70 countries worldwide.
Sigurd’s very strong balance sheet is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects Sigurd’s risk-adjusted capitalisation to remain at the strongest level, supported by the captive’s conservative investment and reserving policies, its moderate exposure to catastrophe losses and its comprehensive retrocession programme with a well-rated panel of retrocessionaires. An offsetting factor is a cash pooling agreement in place with the Saipem group, which creates concentration risk within the company’s asset portfolio.
The captive’s robust earnings have been driven by its underwriting account. The combined ratio remained excellent at 49% in 2018, which represented an improvement of six percentage points when compared with the prior year. Sigurd’s five-year average return on equity is 17% (2014-2018). Although AM Best expects a higher combined ratio in 2019, the captive’s operating performance should remain supportive of a strong assessment.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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