A.M. Best Europe – Rating Services Limited has affirmed the
financial strength rating of A- (Excellent) and the issuer credit
ratings of “a-” ofInfrassure Ltd. (Infrassure) (Switzerland) and
its affiliate, Infrassure Ltd., Vaduz (Infrassure Vaduz)
(Liechtenstein). The outlook for all ratings remains stable.
The ratings of Infrassure reflect its strong risk-adjusted
capitalisation and good business profile as a specialist engineering and
industrial property insurer. Offsetting these factors is the company’s
volatile operating performance. The ratings of Infrassure Vaduz reflect
the significant support provided by Infrassure in the form of a 90%
quota share reinsurance agreement. Infrassure Vaduz remains
strategically important to Infrassure as a means of writing direct
insurance business within the European Union.
Infrassure’s risk-adjusted capitalisation remained stable in 2011. The
company’s capitalisation continues to be enhanced by an equalisation
reserve, which at year-end 2011 amounted to CHF 12.7 million. In 2011,
the reduction in net written premiums, which was due to the company’s
response to the current market conditions, contributed to a fall in net
required capital. However, this positive effect was offset by a dividend
payment of CHF 12.0 million and a deterioration in net income
predominantly caused by natural catastrophes.
Infrassure reported a pre-tax profit of CHF 5.1 million for the first
six months of 2012, with a combined ratio of 109% (based on the
company’s own calculations). Technical performance was impaired by four
large losses, including a large forest fire in Chile. Despite continuing
weak market conditions in Infrassure’s core line of business, A.M. Best
expects that the company will return to underwriting profitability by
the end of 2012. The company reported a pre-tax loss of CHF 3.1 million
at the end of 2011. Results were impacted by poor investment returns,
including significant market and foreign exchange losses, as well as
several large losses totalling CHF 107.7 million. Nevertheless,
Infrassure reported a respectable loss ratio of 66.1% and a combined
ratio of 93.2% at year end.
Infrassure maintains a good position as a specialist insurer of
engineering and industrial property risks. The company benefits from the
combination of specific engineering knowledge and insurance expertise in
its underwriting function. In 2012, gross written premium is unlikely to
significantly increase, as the company seeks to maintain underwriting
disciple in challenging times.
Upward rating movement could occur if there were a marked and sustained
improvement in Infrassure’s underwriting performance.
Downward rating movement may be triggered if there were a continuous
deterioration in technical and/or overall results and a notable decrease
in the company’s risk-adjusted capitalisation.
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: “Catastrophe Analysis in A.M. Best Ratings”; “Risk
Management and the Rating Process for Insurance Companies”; “Rating
Members of Insurance Groups”; and “Understanding Universal BCAR”. 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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Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS
A.M. Best Co.Grace Panti-Amoa, +(44) 20 7397 0331Associate
Dobbyn, +(44) 20 7397 0264Associate Directorsam.firstname.lastname@example.orgRachelle
Morrow, +(1) 908 439 2200, ext. 5378Senior Manager, Public
Peavy, +(1) 908 439 2200, ext. 5644Assistant Vice President,
Source: A.M. Best Co.