AMSTERDAM--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of ERIKA Försäkringsaktiebolag (publ) (Erika) (Sweden). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Erika’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
Erika’s strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), along with its conservative and liquid investment portfolio and prudent reserving collectively contribute to an overall balance sheet assessment of very strong by AM Best.
Additionally, consistently favourable earnings, including small investment gains, lead to an overall operating performance assessment of strong. The company’s strong operating performance track record is demonstrated by a five-year average combined ratio of 89.3% (2016-2020) and a five-year (2016-2020) average return on equity of 7.4%. The company has reported a technical surplus in each of the past 15 years (2006-2020), signifying sound underwriting practices. AM Best expects Erika to remain profitable in 2021 despite the ongoing impact on gross written premium from global travel restrictions due to the COVID-19 pandemic.
Erika is the primary provider of travel insurance to people travelling worldwide on the various international education programmes offered by Education First (EF). All business is sourced solely from EF tour operators, which limits Erika’s control over distribution and growth. Erika’s limited business profile assessment also reflects its relatively small portfolio, concentrated within one line of business. However, the risks associated with this concentration are mitigated partially by its moderate product risk and good geographical diversification.
AM Best considers Erika’s ERM to be developed and appropriate for the company’s risk profile and operational scope.
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