AM Best Affirms Credit Ratings of Ansvar Insurance Limited
June 20 2024 - 10:41AM
Business Wire
AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-”
(Excellent) of Ansvar Insurance Limited (Ansvar) (Australia). The
outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Ansvar’s balance sheet strength, which AM
Best assesses as very strong, as well as its marginal operating
performance, limited business profile and appropriate enterprise
risk management. In addition, Ansvar’s ratings factor in rating
enhancement to reflect its ownership, integration and support from
Ecclesiastical Insurance Office plc (EIO).
Ansvar’s balance sheet strength is underpinned by its
risk-adjusted capitalisation, as measured by Best’s Capital
Adequacy Ratio (BCAR), which is expected to remain at least at the
very strong level over the medium term. Ansvar has prudent capital
management in place, with a track record of financial flexibility
to support its regulatory solvency position and risk-adjusted
capitalisation. Ansvar experienced a higher-than-expected volume of
physical and sexual abuse (PSA) claims over the past six years,
predominantly arising from legacy exposures. Whilst there remains a
high level of uncertainty surrounding provisioning in this area,
Ansvar’s net exposure is limited by a PSA excess-of-loss cover
provided by EIO. Other balance sheet considerations include the
company’s low-risk investment portfolio and high reinsurance
dependence to support the underwriting of large limit property
risks and long-tail liability exposures.
AM Best assesses Ansvar’s operating performance as marginal.
Operating performance metrics exhibited heightened volatility over
the past five years, predominantly as a result of weather-related
events and PSA claims. However, the company recorded positive
operating earnings in 2022 and 2023, supported by recoveries
arising from a stop loss reinsurance programme with EIO. Investment
income continues to be a key contributor to overall earnings. In
2023, the company reported a net investment yield of 5.1%.
Ansvar is a niche insurer that provides commercial property and
casualty products to its target customer groups in Australia,
including care, community, faith, education, heritage and property
owners. Ansvar has a long-established presence in its target niche
sectors where it leverages its strong expertise and brand
recognition. This advantage is offset partially by the company’s
limited control over distribution, due to its reliance on
non-affiliated intermediary channels.
Ansvar’s ratings incorporate rating enhancement from EIO, a
U.K.-based insurance group that specialises in providing commercial
insurance to the faith, heritage, charity, education and real
estate sectors. EIO is itself a member of the specialty insurance,
investment and broker and advisory group, Benefact Group plc. The
rating enhancement reflects explicit support from EIO, including a
series of capital injections and significant intra-group
reinsurance protection to Ansvar. Both the PSA excess-of-loss cover
and stop loss programme have been renewed for 2024, with these
reinsurance arrangements expected to substantially limit downside
risk to Ansvar’s operating performance and balance sheet strength
fundamentals over the near term. Prospectively, AM Best expects
group support to remain available if Ansvar’s performance
volatility persists.
Ratings are communicated to rated entities prior to
publication. Unless stated otherwise, the ratings were not amended
subsequent to that communication.
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 Performance Assessments, 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.
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Yi Ding Senior Financial Analyst +65 6303
5021 yi.ding@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Victoria Ohorodnyk Director, Analytics +65 6303
5020 victoria.ohorodnyk@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com