A.M. Best Affirms Credit Ratings of Eurasia Insurance Company JSC
The negative outlook on Eurasia’s Long-Term ICR reflects A.M. Best’s view that whilst the company’s underwriting performance has improved from 2015, when it reported a combined ratio of 140.0%, it remains volatile and has not returned to its historical strong level. Eurasia faces intense competition and a fluctuating operating environment in its foreign and local markets, which creates concerns as to the company’s ability to maintain strong underwriting results over the long term.
The ratings reflect Eurasia’s balance sheet strength, which
Eurasia’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is maintained at the strongest level, low dependence on reinsurance and an adequate reserving approach that has led to reserve redundancies. The company has taken steps in recent years to improve the quality of its investment portfolio. However, its asset base remains heavily exposed to the high financial system risk in
Eurasia’s ultimate parent, Eurasian Financial, has a negative impact on the insurer’s balance sheet strength assessment, primarily due to its ownership of
Eurasia’s operating performance is strong, with the company reporting a five-year weighted average combined ratio of 96.9% and return on equity of 19.0% (2013-2017). Eurasia’s technical results have been subject to volatility, for example due to large losses or local currency devaluation and a subsequent strengthening of reserve provisions on foreign business. In spite of this, Eurasia has reported positive operating earnings in each of the past 10 years.
A.M. Best’s assessment of Eurasia’s business profile as neutral stems from its dominant role in the local (re)insurance market and its geographical diversification through international inwards reinsurance, which provides Eurasia with the flexibility needed to respond to negative market trends in
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
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