Best’s News & Research Service - September 28, 2020 07:52 AM (EDT)
AM Best Affirms Credit Ratings of European Liability Insurance for the Nuclear Industry
- September 28, 2020 07:52 AM (EDT)
Amsterdam //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of European Liability Insurance for the Nuclear Industry (ELINI) (Belgium). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect ELINI’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
The mutual’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR); taking into account the mutual’s ability to make supplementary capital calls to its members. In the unlikely event of a full limit loss, there would be a material depletion of capital due to the large gross and net line size offered by ELINI relative to its capital base. However, AM Best expects ELINI to rebuild its capital position quickly due to its contractual right to call retrospective premium for twenty times each member’s annualised premium contribution. An offsetting factor in AM Best’s assessment is the mutual’s dependence on reinsurance to offer a large gross line size.
ELINI has a track record of good earnings generation, demonstrated by a five-year weighted average operating ratio of 30% for the period ending in 2019. AM Best’s expects prospective performance to remain strong and similar to historical levels in the absence of a large nuclear liability loss.
ELINI has a developing profile as a specialist in the nuclear energy sector, offering third-party liability coverage to nuclear operators. Gross written premium has grown rapidly, averaging 12% for the five-year period ending in 2019, supported by strong demand. AM Best considers the mutual’s narrow focus and the high-risk nature of the business written as offsetting factors in the assessment.
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 analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.