Best’s News & Research Service - December 17, 2019 11:11 AM (EST)
AM Best Affirms Credit Ratings of Coface North America Insurance Company
- December 17, 2019 11:11 AM (EST)
Amsterdam //BestWire// - AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Coface North America Insurance Company (CNAIC) USA. CNAIC is a subsidiary of Coface S.A. (Coface), the non-operating holding company of the Coface group. The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Coface’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management. The ratings consider CNAIC’s strategic importance to Coface as its vehicle to access the North America market.
Coface’s balance sheet strength is underpinned by consolidated risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects the group’s risk-adjusted capitalisation to remain at the strongest level prospectively, supported by good internal capital generation. Offsetting factors include elevated investment risk relative to peers and significant operating leverage driven by the group’s factoring business. Furthermore, AM Best considers Coface to be dependent on reinsurance, although the associated risks are mitigated partially by the group’s long-standing relationships with reinsurers of excellent credit quality.
The adequate operating performance assessment reflects Coface’s relatively stable performance since the 2008 financial crisis, although results were impacted adversely in 2016 by losses in emerging markets in which the group experienced rapid growth. A subsequent change in top management and the introduction of a new three-year strategic plan have returned loss ratios to pre-2016 levels. Prospective results are likely to be tested by the elevated level of competition in the trade credit insurance industry, following several years of relatively benign claim experience. However, AM Best expects the group’s operating performance to remain adequate over the medium term, supported by management’s ability to take prompt risk-mitigating actions on non-performing business when required.
Coface benefits from a leading position within the global credit insurance market. Although the group is largely a mono-line insurer, its exposures are well-diversified by geography and industry. Fee-based services and factoring businesses in Poland and Germany also provide some diversification.
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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data provider specialising in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.