AM Best Affirms Credit Rating of Net Insurance S.p.A.

AMSTERDAM--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Net Insurance S.p.A. (Net Insurance) (Italy). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Net Insurance’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The company’s balance sheet strength, which is assessed as adequate, reflects its risk-adjusted capitalisation, which is considered to be at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Offsetting factors includes the composition of Net Insurance’s investment portfolio, which includes material exposure to Italian sovereign debt, and the company’s small capital base, which increases the potential for volatility in risk-adjusted capitalisation. Dependence on reinsurance is high, although the risks associated with this dependence are partially mitigated by the excellent credit quality of its reinsurance panel.

Net Insurance’s operating performance, which is assessed as adequate, is supported by an emerging trend of good technical results, with the company reporting technical profits in four of the past five years following a sustained period of losses. For the five-year period ending in 2020, the non-life combined ratio was 90.5%, as calculated by AM Best. Non-technical performance has been volatile and heavily influenced by the effects of an alleged fraud loss in 2017 and subsequent recovery efforts. AM Best expects the company’s prospective performance to remain positive, underpinned by technical profitability.

Net Insurance has a leading profile as a specialist in the Italy’s Cessione del Quinto (CQ) loan insurance market. The company leverages its expertise and innovative approach to compete against the CQ market’s larger players. Net Insurance is making ongoing investments in its distribution capabilities as it looks to continue its growth in other business lines. AM Best considers the company’s narrow focus and geographic concentration to be offsetting factors in the business profile assessment.

Net Insurance’s ERM is assessed as appropriate. Since 2019, the ERM programme has been strengthened, concurrent with the current management team’s tenure and the company’s acquisition by Archimede SPAC. The company’s ERM framework includes a clear risk appetite and risk tolerance statements, as well as appropriate control systems.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.