Press Release - AUGUST 17, 2017
A.M. Best Affirms Credit Ratings of Electric Insurance Company and Its Subsidiary
FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 17, 2017
The ratings reflect Electric’s strong risk-adjusted capitalization, sustained operating profitability and broad geographic and product line diversification. The ratings also take into consideration the value-added commercial insurance services provided to General Electric Company (GE), as well as Electric’s strategic importance to GE.
The ratings of Electric are afforded to EIIDAC primarily due to its affiliation with Electric, its integration into Electric’s business plan, as well as its supportive capitalization, profitable operating performance and strategic role in providing commercial lines products to GE in the European Union.
Partially offsetting these positive rating factors are the limitations on its commercial lines business to one policyholder, GE. Most commercial lines are rated retrospectively however, contributing to reduced risk and steady earnings. While retrospective rating features in commercial policies limit the earnings potential of an insurance company, this also protects a company from excessive loss by allowing it to charge back losses through premium adjustments. In addition, although decreasing, Electric has a significant gross exposure in its workers’ compensation line, which is materially diminished by reinsurance protections, including the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA).
Future positive rating action could be taken if Electric’s profitability and capital appreciation continue to remain strong. However, the ratings may come under negative pressure if there is a material weakening in risk-adjusted capital or a reduction in Electric’s strategic importance to GE or its overall business profile.
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 A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.