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FOR IMMEDIATE RELEASE
LONDON - JANUARY 24, 2019 12:16 PM (EST)
AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Sveriges Ångfartygs Assurans Förening (The Swedish Club) (The Club or TSC) (Sweden). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect TSC’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
TSC’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The Club’s free reserves have grown by an annual compound rate of approximately 7% over the past five years (2013-2017). The Club maintains a good liquidity profile, with the majority of its investment portfolio allocated to securities that are listed in active markets.
In 2017, the combined ratio increased to approximately 105% (2016: 98%), due to a higher frequency of small losses and a declining premium base. In spite of this, the Club generated a return on equity (ROE) ratio of 8.7% (2016: 5.9%), supported by strong investment results. Historical performance has been moderately volatile, with earnings varying from a loss of USD 1 million to a profit of USD 18 million over the period 2013 and 2017. AM Best expects TSC to report an operating loss in 2018, underpinned by a breakeven underwriting result and a negative investment return. In prospective years, the company is expected to produce low single-digit ROEs.
TSC maintains a well-diversified portfolio within the marine insurance market, offering hull & machinery and protection & indemnity (P&I) types of cover, and benefits from its membership of the International Group of P&I Clubs. Overall premiums have declined in recent years due to continued negative pressure on premium rates. However, TSC is well-positioned to benefit from potential rate improvements in 2019 following the withdrawal of capacity from poorly performing marine insurance segments.
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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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