AMSTERDAM--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a+” (Excellent) of Atradius Crédito y Caución S.A. de Seguros y Reaseguros (ACyC) (Spain), Atradius Reinsurance Designated Activity Company (ARe) (Ireland), Atradius Trade Credit Insurance, Inc. (ATCI) (U.S.) and Atradius Seguros de Crédito, S.A. (Atradius Mexico) (Mexico), which are the main operating subsidiaries of non-operating holding company Atradius N.V. (Atradius) (Netherlands). Concurrently, AM Best has affirmed the Long-Term Issue Credit Rating of “bbb” (Good) of the EUR 250 million, 5.25% subordinated fixed to floating rate guaranteed notes, due 2044, issued by Atradius Finance B.V. (Netherlands) and unconditionally and irrevocably guaranteed on a subordinated basis by Atradius. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Atradius’ balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management. The ratings of ACyC, ARe, ATCI and Atradius Mexico consider their strategic importance to Atradius as its primary underwriting entities in the group’s key markets around the world.
Atradius’ balance sheet strength is underpinned by its consolidated risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which remained at the strongest level at year-end 2022. AM Best expects Atradius’ prospective risk-adjusted capitalisation to be maintained at the strongest level, supported by good internal capital generation over the cycle and conservative capital management. The group’s balance sheet strength assessment also benefits from its good liquidity profile and relatively conservative investment portfolio. A partly offsetting factor in the assessment is the group’s relatively high dependence on reinsurance, although the risks associated with this dependence are partially mitigated through the use of a well-diversified panel of reinsurance counterparties of excellent credit quality.
Atradius has a track record of strong operating performance, as demonstrated by a 10-year (2013-2022) weighted average return-on-equity ratio of 11% and a combined ratio of 78% (as calculated by AM Best). Atradius' credit insurance business returned a net combined ratio of 74% in 2022, reflecting continued low claims frequency. Claims frequency during the first quarter of 2023 has seen a gradual increase from low levels recorded in 2021 and 2022. AM Best believes that Atradius’ strong underwriting expertise and exposure management, together with its ability to take prompt risk-mitigating actions on non-performing business, will allow it to maintain a strong performance record over the cycle.
Atradius benefits from a leading position in the global credit insurance market, which is characterised by high barriers to entry. Although the group is largely a monoline insurer, its exposures are well-diversified by geography and industry. Atradius’ favourable business profile is underpinned by its good access to key markets as a result of the group’s strong global franchise and comprehensive network of agents and intermediaries.
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