AM Best Downgrades Credit Ratings of Sigurd Rück AG; Places Credit Ratings Under Review With Negative Implications

LONDON--(BUSINESS WIRE)--
AM Best has downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bbb+” (Good) from “a-” (Excellent) of Sigurd Rück AG (Sigurd) (Switzerland). In addition, AM Best has placed these Credit Ratings (ratings) under review with negative implications.

The ratings reflect Sigurd’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings also factor in Sigurd’s association with its parent company, Saipem S.p.A. (Saipem). Sigurd is a captive reinsurer of Saipem and a key element of the group’s risk management framework.

The rating downgrades follow the deterioration in Saipem’s credit fundamentals, with the group recently announcing that it will report significant losses for the second consecutive year, raising concerns around its short-term liquidity and solvency positions.

Sigurd has significant exposure to credit risk associated with Saipem, notably through a cash-pooling agreement with the group. As at 31 December 2020, Sigurd’s funds allocated to the cash pooling with Saipem represented 52.6% and 70.0% of the company’s total assets and capital and surplus, respectively.

The ratings have been placed under review with negative implications as the deterioration of Saipem’s credit fundamentals has the potential to impact Sigurd’s balance sheet strength negatively. The ratings are expected to remain under review until Saipem publishes its results for 2021 and clarifies its strategic direction, and until AM Best has assessed the impact of the Saipem group’s creditworthiness on Sigurd’s rating fundamentals.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Romeo Berti, ACA, CMA

Financial Analyst

+44 20 7397 0267

[email protected]

Christopher Sharkey
Manager, Public Relations

+1 908 439 2200, ext. 5159

[email protected]

Ghislain Le Cam, CFA, FRM

Director, Analytics

+44 20 7397 0268

[email protected]

Jim Peavy
Director, Communications

+1 908 439 2200, ext. 5644

[email protected]

Source: AM Best