Tuesday, May 21, 2024

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Enel completes captive merger, Italian reinsurer assigned Excellent rating

Enel Erre S.p.A., the new Italian reinsurance captive owned by energy multinational Enel, has been assigned a financial strength rating of ‘A-‘ (Excellent) and a long-term issuer credit rating of ‘a-’ (Excellent) by AM Best.

Captive Intelligence reported in November that Enel Erre (EE) was the first captive to be licensed by Italian regulator IVASS and the energy giant planned to merge the new entity with its existing Netherlands-domiciled captive, Enel Insurance NV.

In assigning the ratings for Enel Erre, AM Best confirmed that the assets and liabilities of Enel Insurance had now been transferred to the new entity.

“The aim of the transaction was to redomicile the captive operation of Enel to Italy, where the group is based,” the rating agency stated.

“Going forward, EE will be the new captive insurer of the Enel S.p.A. group. Enel Insurance N.V. ceased to exist as a result of the cross-border merger. EE will be renamed Enel Reinsurance – Compagnia di riassicurazione S.p.A.”

AM Best said it expects EE’s risk-adjusted capitalisation to be maintained “with a comfortable buffer at the strongest level”, and added that the captive benefits from good liquidity and low reinsurance dependence.

“An offsetting rating factor is EE’s potential exposure to large losses given its high net retention per risk, which has the potential to introduce volatility in capitalisation levels,” AM Best said.

“EE’s operating performance assessment reflects AM Best’s expectations that prospective combined ratio will remain within the captive’s through-the-cycle target of between 95% and 100%. Solid investment income is expected to contribute positively to overall profitability.”