AM Best confirms electric insurance company’s credit ratings – InsuranceNewsNet

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OLDWICK, NJ–(BUSINESS WIRE)–
AM Best affirmed the financial strength rating of A (Excellent) and the long-term credit rating of “a+” (Excellent) of Electric insurance company (IEC) (Beverly, Mass.). The outlook for these Credit Ratings (ratings) is stable.

The ratings reflect EIC’s balance sheet strength, which AM Best assesses as the strongest, as well as its adequate operating performance, neutral business profile and appropriate management of business risks. The ratings also take into account the value-added commercial assurance services provided to its parent company, General Electric Company (GE) and the strategic importance of EIC to GE.

EIC’s ratings reflect the assessment of the strength of its balance sheet which is underpinned by a risk-adjusted capitalization at the highest level, as measured by Best’s capital adequacy ratio (BCAR). EIC’s ratings also reflect the company’s conservative approach to reserving with consistent favorable calendar and accident year development, consistent level of investment income, favorable expense management and loss of claims. trends. The company provides commercial line coverage to GEand personal lines coverage to current and former GE employees, as well as the general public.

These positive rating factors are partially offset by the limitation of EIC’s commercial lines activity with having GE as its sole subscriber. However, most of the company’s business lines are priced retrospectively, which helps reduce risk and generate stable revenue. Although the retrospective pricing features of commercial policies can limit an insurance company‘s revenue potential, they can also protect a business from excessive loss by allowing it to pass on losses through premium adjustments. Although EIC’s largest line of business is workers’ compensation, its exposure to terrorism is limited. Due to the disposal activity of GE, EIC’s premium and reserve levels continued to decline. In 2021, premium and reserve amounts decreased by 16% and 31%, respectively, from 2017 levels. As EIC’s exposure decreased, the company returned significant amounts of capital under the form of shareholder dividends to its parent company. AM Best closely monitored dividends paid to the parent company and declining surplus levels, and found no weakening of the company’s BCAR scores as a result of this activity.

In May 2021EIC sold its Ireland– domiciled subsidiary, Electric Insurance Ireland Designated Activity Company (EIIDAC), which provided employer and general liability insurance to GE in Europe. GE’s European coverage has now been placed into GE’s international liability insurance program through third party commercial insurance.

In November 2021, GE announced its intention to split into three companies focused on aviation, healthcare and energy. There is no change to the current structure of EIC in the short term. As the transition to the spin-off will take several years, EIC will continue to focus on supporting GE’s business and further developing its successful personal lines business.

AM Best remains the leading rating agency for alternative risk transfer entities, with over 200 such vehicles rated in United States and across the world. For current Best credit ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

This press release relates to credit ratings that have been published on AM Best’s website. For all rating information relating to the publication and relevant disclosures, including office details responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Assessment Activity Web page. For more information on the use and limitations of credit rating opinions, please see Best Credit Score Guide. For more information on the proper use of Best’s Credit Ratings, Best’s Performance Ratings, Best’s Preliminary Credit Ratings, and AM Best’s press releases, please see Guide to Proper Use of Best’s Ratings and Reviews.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Based at United Statesthe company does business in more than 100 countries with regional offices in London, amsterdam, dubai, hong kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Chul Hyung Lee
Senior Financial Analyst

+1 908 439 2200 ext. 5036

[email protected]

Fred Eslami
Associate Director

+1 908 439 2200 ext. 5406

[email protected]

Christopher Sharkey
Manager, Public Relations

+1 908 439 2200 ext. 5159

[email protected]

Jeff Mango
General director,

Communications Strategy

+1 908 439 2200 ext. 5204

[email protected]

Source: AM Best

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