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FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 17, 2016 08:45 AM (EDT)
A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” to Enel Insurance N.V. (Enel Insurance) (Netherlands), a captive of Enel S.p.A. (Enel Group), a multi-national electric utility company in Italy. The outlook for each rating remains stable.
The ratings reflect Enel Insurance’s good risk-adjusted capitalisation, as well as its robust, albeit volatile, performance record, which has been highly reliant on investment income. The ratings also reflect the captive’s importance within Enel Group’s risk management framework. A partly offsetting factor is Enel Insurance’s relatively large maximum gross line size, which is mitigated by comprehensive reinsurance protection.
A.M. Best expects Enel Insurance’s risk-adjusted capitalisation to remain good, supported by internal capital generation. In the first half of 2016, risk-adjusted capitalisation was enhanced by a material net gain following the sale of an insurance subsidiary, Compostilla Re S.A., as well as by a reduction in the risk profile of the captive’s investment portfolio, due to the divestment of Italian sovereign and parental bond holdings. The captive has reinvested the proceeds in higher quality bonds, which have improved the diversification and quality of its fixed interest portfolio.
A.M. Best’s assessment considers Enel Insurance’s underwriting approach of targeting a modest underwriting profit through the cycle. The captive reported a combined ratio of 103% in 2015, largely due to adverse reserve development on a legacy claim. Going forward, it is expected that underwriting results will improve modestly. The captive reported a combined ratio of about 90% for the first half of 2016.
The ratings also reflect the captive’s strategic importance to, and its integration within the Enel Group. Integration of additional business units’ risk management with the Enel Group’s centralised function is likely to increase use of the captive. Enel Insurance’s primary objective is to manage the group’s exposure to property/casualty risks.
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 rating(s) 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.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.