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FOR IMMEDIATE RELEASE
LONDON - DECEMBER 08, 2017 09:49 AM (EST)
A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Société Hospitalière d’Assurances Mutuelles (Sham) (France). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Sham’s balance sheet strength, which A.M. Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Sham benefits from a favourable position in its niche market, as a leading provider of medical professional liability insurance (MPLI) in France, where it holds a market share of approximately 50%. The company leverages its strong brand recognition and expertise to provide specialist insurance solutions to the medical profession. However, Sham’s underwriting portfolio is concentrated, with MPLI accounting for approximately 70% of gross written premium (GWP) and 95% of gross technical provisions in recent years. This concentration, in what is a specialist class of business, is considered an offsetting rating factor in the business profile assessment. The company mitigates this concentration through disciplined underwriting, pricing and claims handling practices. Additionally, Sham is executing an ongoing strategy to diversify its business mix and geographical footprint, most notably with the acquisition of the French broker, Sofaxis, in 2013, as well as through measured international expansion within Europe. Sham has launched operations in neighbouring European countries in recent years, which generated approximately 7% of the group’s consolidated GWP in 2016.
Sham’s very strong balance sheet is underpinned by risk-adjusted capitalisation at the strongest level, an investment portfolio of good quality and the mutual’s history of prudent reserving practices. A.M. Best expects Sham’s prospective risk-adjusted capitalisation to remain at the strongest level, with growth and development initiatives, supported by good internal capital generation through the full retention of earnings. Sham’s balance sheet strength assessment also factors in the company’s moderate dependence on reinsurance support, with 40% of business written ceded out, although the mutual benefits from a panel of supportive and longstanding partners.
Sham has a track record of operating profitably, evidenced by the company’s five-year average (2012-2016) operating ratio of 82.2% (as calculated by A.M. Best). Over recent years, operating results have been largely driven by investment income, while technical performance has remained a weaker component of performance, returning a five-year average (2012-2016) combined ratio of 101.4% (as calculated by A.M. Best), in part due to management’s prudent reserving philosophy.
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.
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