A.M. Best Affirms Ratings of Euler Hermes American Credit Indemnity Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and issuer credit rating of “aa-” of Euler Hermes American Credit Indemnity Company (Euler Hermes ACI) (Owings Mills, MD). The outlook for both ratings is stable.

The ratings reflect Euler Hermes ACI’s strong capitalization, strong pre-crisis operating performance and leading market position as the largest trade accounts receivable insurer in the United States. The ratings also reflect the implicit support provided by the company’s parent organization, comprised of its ultimate parent, Allianz Societas Europaea (Allianz SE), intermediate parent Euler Hermes S.A. and affiliates, given their ownership, reinsurance protection, infrastructure integration, enhanced marketing capabilities and financial flexibility.

These positive rating factors are partially offset by the significant downturn in operating results during the recent credit crisis, given the increased loss frequency caused by an increase in bankruptcies and default rates, as well as the impact of adverse loss reserve development occurring on recent accident years (although this has improved markedly during 2010). Additionally, Euler Hermes ACI’s growth in policyholder surplus has been constrained, given the level of stockholder dividends paid during the recent five-year period. Despite the downturn in results, additional volatility was partially mitigated by Euler Hermes ACI’s very effective risk management and significant utilization of reinsurance.

The rating outlook recognizes A.M. Best’s expectation that, despite the prolonged economic recovery, Euler Hermes ACI’s strong risk-adjusted capitalization, support from Allianz SE and the group and effective risk management will sustain the ratings over the long term.

Euler Hermes ACI is a wholly owned subsidiary of Euler Hermes ACI Holding, Inc, which in turn is a wholly owned subsidiary of Euler Hermes S.A., a global leader in accounts receivable insurance with a global market share of more than 35%. Euler Hermes S.A. is ultimately owned by Allianz SE.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; and “Assessing Country Risk.” Methodologies can be found at www.ambest.com/ratings/methodology.

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.

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A.M. Best
Gordon McLean, 908-439-2200, ext. 5304
Senior Financial Analyst
gordon.mclean@ambest.com
or
Gerard Altonji, 908-439-2200, ext. 5626
Assistant Vice President
gerard.altonji@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Source: A.M. Best Co.