LONDON--(BUSINESS WIRE)-- 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.

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company.Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best Co.
Grace Panti-Amoa, +(44) 20 7397 0331
Associate Financial Analyst
grace.panti-amoa@ambest.com
or
Sam Dobbyn, +(44) 20 7397 0264
Associate Director
sam.dobbyn@ambest.com
or
Rachelle Morrow, +(1) 908 439 2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Source: A.M. Best Co.