AMSTERDAM–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Net Insurance S.p.A. (Net Insurance) (Italy). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Net Insurance’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The balance sheet strength assessment of adequate reflects Net Insurance’s risk-adjusted capitalisation, which is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Offsetting factors are the composition of Net Insurance’s investment portfolio, which includes material exposure to Italian sovereign debt, and the company’s small capital base, which increases the potential for volatility in risk-adjusted capitalisation. Dependence on reinsurance is high, although the risks associated with this dependence are mitigated partially by the excellent credit quality of the company’s reinsurance panel.
Net Insurance’s operating performance, which is assessed as adequate, is supported by an emerging trend of good technical results, with the company reporting technical profits in the past six years following a sustained period of losses. At year-end 2021, the non-life combined ratio stood at 92.2%, as calculated by AM Best, and technical profits amounted to EUR 11.9 million (2020: EUR 5.6 million). Non-technical performance has been volatile and heavily influenced by the effects of an alleged fraud loss in 2017 and subsequent recovery efforts. AM Best expects prospective performance to remain positive, underpinned by technical profitability.
Net Insurance has a leading profile as a specialist in Italy’s Cessione del Quinto (CQ) loan insurance market. The company leverages its expertise and innovative approach to compete against the CQ market’s larger players. Net Insurance is making ongoing investments in its distribution capabilities as it looks to continue its growth in other business lines. AM Best considers the company’s narrow focus and geographic concentration to be offsetting factors in the business profile assessment.
Net Insurance’s ERM is assessed as appropriate. Since 2019, the ERM programme has been strengthened, concurrent with the current management team’s tenure and the company’s acquisition by Archimede SPAC. The company’s ERM framework includes a clear risk appetite and risk tolerance statements, as well as appropriate control systems.
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. For more information, visit www.ambest.com.
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