AMSTERDAM: AM 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) of Ireland, a captive of Eni S.p.A. (Eni), a multinational energy company based in Italy.
The outlook of these Credit Ratings is stable.
The ratings reflect EID’s balance sheet strength, which AM 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 reliance on reinsurance to write large risks; however, the risks associated with this reliance are mitigated partly by long-standing relationships with reinsures of excellent credit quality.
EID has a track record of strong operating profits, evidenced by a five-year average combined ratio of 54.2% (2014-2018). In 2018, EID produced a pre-tax profit of EUR 56 million (2017: EUR 40 million), underpinned by a robust underwriting result. The combined ratio remained excellent at 40%, which represents an improvement compared with 2017 (49%).
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.