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 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 assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
The mutual insurer’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR); taking into account ELINI’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 20 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 combined ratio of 29% for the period ending in 2020. Gross written premium grew by 9% in 2020 (22% in 2019), supported by strong demand. AM Best 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. 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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