Best’s News & Research Service - October 01, 2018 09:29 AM (EDT)
A.M. Best Assigns Credit Ratings to S2C S.p.A. Compagnia di Assicurazioni di Crediti e Cauzioni
- October 01, 2018 09:29 AM (EDT)
London //BestWire// - A.M. Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” to S2C S.p.A. Compagnia di Assicurazioni di Crediti e Cauzioni (S2C) (Italy). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect S2C’s balance sheet strength, which A.M. Best categorises as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
S2C’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), is categorised as strongest, and A.M. Best expects it to remain at least at a very strong level over the medium term. Offsetting rating factors for balance sheet strength include the company’s significant investment concentration in Italian government bonds, its limited financial flexibility, and its small capital base, which increases the potential for volatility in risk-adjusted capitalisation. Dependence on reinsurance is high, although the associated credit risk is mitigated partially by the company’s long-standing relationships with reinsurers of excellent credit quality.
S2C has a track record of good operating profits, driven by its robust underwriting performance and demonstrated by a five-year average combined ratio of 73% (2013-2017). In 2017, the combined ratio increased by four percentage points to 68% from the prior year, due to a deterioration in claims experience. Although overall results since 2012 have been good, A.M. Best notes that prospective performance will be closely correlated to economic conditions in Italy and may be volatile.
S2C is a niche mono-line insurer that focuses on the highly competitive surety market in Italy. The company leverages its specialist expertise to compete against larger players and maintains sustainable premium rates. S2C has a developed ERM framework, with clear risk appetite and tolerance levels in place.
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.
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