A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of "a" of Eni Insurance Designated Activity Company(EID) (Ireland), a captive of Eni S.p.A. (Eni), a multinational energy company based in Italy. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect EID's balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
EID's risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), is categorised as strongest and is expected to remain at the strongest level over the medium term. An offsetting rating factor in the balance sheet assessment is EID's exposure to peripheral European sovereign bonds, which accounted for approximately 22% of its fixed income portfolio in 2017, down from 30% in 2016. Additionally, the captive is reliant on reinsurance to write large risks. Although this reliance has been exacerbated in 2017 by another material increase in its gross maximum line size, associated credit risk is mitigated partly by the excellent quality of EID's reinsurance panel.
EID has a track record of strong operating profits, evidenced by a five-year average combined ratio of approximately 56% (2013-2017). In 2017, EID produced a pre-tax profit of EUR 40 million (2016: EUR 19 million), underpinned by a robust underwriting result. The combined ratio was excellent at 49%, an improvement compared to the combined ratio of 85% for 2016, which was negatively affected by a large loss. Prospective performance is subject to volatility due to potential large losses from EID's property account. However, underwriting volatility should be moderated by the captive's comprehensive reinsurance programme.
EID is well-integrated within the Eni Group's risk management framework and has an active role in overseeing and containing the group's insurance costs. Additionally, the captive enables the group to centralise claims information and establish effective internal reporting for Eni. EID has a developed ERM framework, with clear risk appetite and tolerance levels in place.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best's Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases
A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information
Copyright 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
+44 20 7397 0304
+44 20 7397 0266
Manager, Public Relations
+1 908 439 2200, ext. 5159
Director, Public Relations
+1 908 439 2200, ext. 5644