LONDON–(BUSINESS WIRE)–AM Best has upgraded the Long-Term Issuer Credit Rating to “a+” from “a” and affirmed the Financial Strength Rating of A (Excellent) of Samsung Fire & Marine Insurance Company of Europe, Limited (SFME) (United Kingdom). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect SFME’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 ratings also factor in both implicit and explicit support from SFME’s intermediate parent, Samsung Fire & Marine Insurance Co., Ltd (SFMI).
The upgrade of the Long-Term ICR reflects AM Best’s view that the explicit support provided to SFME by SFMI has strengthened, following the issuance in 2019 of an agreement under which SFMI shall ensure that the company will maintain adequate capital resources and liquidity to meet its regulatory requirements.
SFME’s balance sheet strength assessment is supported by risk-adjusted capitalisation, which, as measured by Best’s Capital Adequacy Ratio (BCAR) model, is at the strongest level. Prospectively, AM Best expects SFME to maintain a level of capital adequacy that is supportive of the very strong balance sheet strength assessment. Offsetting factors include the company’s small capital base, which increases the potential for volatility in risk-adjusted capitalisation, and its significant dependence on reinsurance for underwriting large limit property risks.
SFME has a track record of excellent, albeit volatile, underwriting performance, demonstrated by a five-year weighted average (2014-2018) combined ratio of 70.4%. Investment income accounts for a small component of overall earnings.
AM Best views SFME as having a limited business profile given the small scale of its operations and concentration towards property and cargo business. The majority of the company’s revenue is generated by insuring Samsung group operations. In addition, SFME underwrites a growing portfolio of third-party risks, primarily within Europe and the Middle East (2018: 25% of gross written premium [2017: 10%]).
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