AMSTERDAM--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Société Hospitalière d’Assurances Mutuelles (Sham) (France). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Sham’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Sham’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). In addition, the company has a liquid investment portfolio composed of high quality assets and a history of prudent reserving. Dependence on reinsurance is relatively high, with the company ceding approximately a third of its gross written premium. The risks associated with this dependence are somewhat offset by the high quality of the reinsurance panel and the longstanding relationships between Sham and its reinsurance partners. AM Best expects Sham’s risk-adjusted capitalisation to remain at the strongest level over the medium term.
Sham’s adequate operating performance assessment is supported by an average non-life combined ratio of 100% for the five-year period ending in 2018. Consolidated profits fell to EUR 16.0 million in 2018 (2017: EUR 25.7 million), driven in part by both lower realised gains and unrealized losses on long-term strategic investments in biotech. Technical results improved, partially due to the company’s strong international performance, which exceeded management’s expectations. In recent years, Sham has expanded outside of France, with growth focused on Italy and Spain. While initial experience in the company’s international operations has been good, AM Best notes that the ultimate profitability of this business will not be clear for some time due to the long-tailed nature of medical professional liability insurance (MPLI). In 2018, international operations made up approximately a third of Sham’s gross earned premium.
Sham’s neutral business profile assessment is supported by its established position in its domestic market, where it has over a 50% share of the MPLI market. Offsetting this strength is the group’s geographical concentration and mono-line business model. In 2018, the group rebranded as Relyens, reflecting its international profile. The company’s legal structure has not changed. The group expects to build on existing relationships with its member base with the long-term goal of providing comprehensive risk management services, which may lead to new revenue sources. Sham has identified how disruptions in the health care industry could impact its business model and is actively investing to benefit from these trends.
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