Best’s News & Research Service - August 03, 2023 12:53 PM (EDT)
AM Best Affirms Credit Ratings of Ecclesiastical Insurance Office plc
- August 03, 2023 12:53 PM (EDT)
London //BestWire// - AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Ecclesiastical Insurance Office plc (EIO) (United Kingdom). At the same time, AM Best has affirmed the Long-Term Issue Credit Rating of “bbb” (Good) on GBP 106,450,000, 8.625%, non-cumulative irredeemable preference shares issued by EIO. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect EIO’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
EIO’s balance sheet strength assessment is underpinned by risk-adjusted capitalisation that AM Best expects to remain comfortably at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). EIO’s conservative reserving practices further support its balance sheet strength. EIO’s investment portfolio has a relatively high allocation to equity investments, which heightens the sensitivity of the company’s risk-adjusted capitalisation to financial market volatility. EIO maintains sufficient capital buffers to absorb the potential volatility in equity assets.
EIO’s operating performance is subject to volatility. In 2022, the company reported a post-tax profit of GBP 11.9 million, supporting its five-year (2018-2022) weighted average return on equity of 4.5%. EIO posted a positive underwriting return in 2022, following two consecutive years of underwriting losses in 2020 and 2021.
Despite EIO having exposure to U.K. cold weather-related losses in the first quarter of 2023, the company remains on target to generate an underwriting profit for the year.
The company has a well-established, unique position in the United Kingdom, offering insurance products and risk management services in the faith, heritage, charity and education sectors. While largely covering business in the United Kingdom, EIO has diversified operations through subsidiaries in Australia, Ireland and Canada. EIO itself is a member of the specialty insurance, investment and broker and advisory group, Benefact Group plc.
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.