AMSTERDAM--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A-(Excellent) and the Long-Term Issuer Credit Rating of “a-” of European Liability Insurance for the Nuclear Industry (ELINI) (Belgium). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect ELINI’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
The mutual’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR); taking into account the mutual’s ability to make supplementary capital calls to its members. In the unlikely event of a full limit loss, there would be a material depletion of capital due to the large gross and net line size offered by ELINI relative to its capital base. However, AM Best expects ELINI to rebuild its capital position quickly due to its contractual right to call retrospective premium for twenty times each member’s annualised premium contribution. An offsetting factor in AM Best’s assessment is the mutual’s dependence on reinsurance to offer a large gross line size.
ELINI has a track record of good earnings generation, demonstrated by a five-year weighted average operating ratio of 30% for the period ending in 2019. AM Best’s expects prospective performance to remain strong and similar to historical levels in the absence of a large nuclear liability loss.
ELINI has a developing profile as a specialist in the nuclear energy sector, offering third-party liability coverage to nuclear operators. Gross written premium has grown rapidly, averaging 12% for the five-year period ending in 2019, supported by strong demand. AM Best considers the mutual’s narrow focus and the high-risk nature of the business written as offsetting factors in the assessment.
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