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FOR IMMEDIATE RELEASE
LONDON - JULY 08, 2022 11:29 AM (EDT)
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). Internal capital generation is expected to support the balance sheet, along with the company’s conservative reserving practices. 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. However, capital buffers are expected to remain sufficient to absorb financial market shocks over the cycle.
EIO has a track record of adequate operating performance, demonstrated by a five-year (2017-2021) weighted average return on equity of 6.4%. In 2021, the company’s post-tax profit of GBP 77 million was driven by unrealised fair value gains on investments. Although the company reported underwriting losses in 2020 and 2021, it is expected to generate underwriting profit over the medium term.
The company has a well-established, unique position in the U.K. not-for-profit market, 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.
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.