Monday, February 26, 2024

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AM Best affirms rating of Eni captive

AM Best has affirmed the financial strength rating of A (excellent) and the long-term issuer credit rating of “a” (excellent) of Ireland-domiciled Eni Insurance Designated Activity Company (EID). The outlook for the ratings is stable.

The single parent captive is owned by Eni S.p.A, an Italian multinational energy company.

EID is well-integrated within Eni’s group risk management framework and has an active role in overseeing and containing the group’s insurance costs.

The captive enables the group to centralise claims information and establish “effective” internal reporting for Eni.

Prospective performance is subject to volatility due to potential large losses from EID’s property account, but underwriting volatility on a net basis should be moderated by the captive’s reinsurance programme.

The ratings reflect EID’s balance sheet strength, which is very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

AM Best assesses EID’s risk-adjusted capitalisation at the strongest level, as measured by Best’s capital adequacy ratio (BCAR) and expects it to remain at this level prospectively.

An offsetting rating factor in the balance sheet strength assessment is EID’s reliance on reinsurance to underwrite large risks.

The risks associated with this reliance are mitigated partly by long-standing relationships with reinsurers of “excellent” credit quality.

EID has a track record of strong operating profits, demonstrated by a five-year weighted average combined ratio of 51.5% (2018-2022).

The company’s underwriting performance has remained strong during the first nine months of 2023.