A.M. Best Europe – Rating Services Limited has assigned a
financial strength rating of A (Excellent) and an issuer credit rating
of “a” to Eni Insurance Limited (EIL) (Ireland). The outlook for
both ratings is stable.
EIL is the sole captive of Eni S.p.A. (Italy), an Italian
multinational gas and oil company with operations in more than 80
The ratings of EIL reflect its strong risk-adjusted capitalisation,
comprehensive reinsurance programme and overall strong financial
performance. Also, the ratings incorporate a strong integration within
the parent’s risk management structure. An offsetting factor is EIL’s
current material fixed income exposure to peripheral European sovereigns.
EIL was formed in June 2006 and writes the industrial risks of Eni
S.p.A. with fire/property damage being the main line (77% of gross
written premiums [GWP] in 2011), whereas 66% of GWP is written outside
of Italy. In January 2007, industrial risks written by the ceased
captive, Padana Assicurazioni S.p.A (Padana) were transferred to EIL.
This portfolio is expected to continue to run off for another few years.
A.M. Best believes that EIL’s current strong level of risk-adjusted
capitalisation is partially a result of earnings retention (since the
company’s inception), and despite the introduction this year of large
dividend payments to its parent, the risk-adjusted capitalisation is
expected to remain supportive of EIL’s ratings. In A.M. Best’s opinion,
the strong risk-based capital is also underpinned by a comprehensive
reinsurance programme, which provides a very good level of protection on
the main lines of business and is placed with a strong panel of
reinsurers. The company’s main programme is fire/property damage and has
a maximum retention for EIL of USD 50 million.
A.M. Best expects EIL to continue to profit from its disciplined
underwriting (five-year average combined ratio of 66%) and is likely to
deliver a strong underwriting performance in the future.
A.M. Best will monitor EIL’s investment portfolio closely as over a
third of the company’s fixed income portfolio is composed of peripheral
European sovereign bonds.
Upward rating movements are unlikely in the next two years.
Negative rating actions could occur if a significant deterioration in
EIL’s risk-adjusted capitalisation would be linked to no evidence of
support from Eni S.p.A. to boost the latter or any material
deterioration in its peripheral European fixed income exposure.
Additionally, any deterioration in EIL’s role within the group could
also put pressure on its ratings.
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Key criteria utilised include:
“Alternative Risk Transfer (ART)”; “Catastrophe Analysis in A.M. Best
Ratings”; “Understanding Universal BCAR”; “Rating Members of Insurance
Groups”; and “Risk Management and the Rating Process for Insurance
Companies”. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
In accordance with Regulation (EC) No. 1060/2009, the following is a
link to required disclosures: A.M.
Best Europe - Rating Services Limited Supplementary Disclosure.
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Source: A.M. Best Europe – Rating Services Limited