AMSTERDAM–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-” of Credendo –
Single Risk Insurance AG (Credendo – Single Risk) (Austria). The outlook
of these Credit Ratings (ratings) remains stable.

The ratings reflect Credendo – Single Risk’s balance sheet strength,
which AM Best categorises as strong, as well as its marginal operating
performance, limited business profile and appropriate enterprise risk
management. The ratings also reflect the support of Credendo – Single
Risk’s parent, Credendo Export Credit Agency. AM Best expects Credendo
Export Credit Agency, which is the operating holding company of a group
of trade credit and political risk insurance companies, to continue to
provide support to Credendo – Single Risk due to its importance to the
group, particularly as a means of diversification.

The company’s balance sheet strength is underpinned by risk-adjusted
capitalisation that AM Best expects to be maintained at the strongest
level, as measured by Best’s Capital Adequacy Ratio (BCAR). The balance
sheet strength assessment also factors in the company’s good liquidity
profile and low net underwriting leverage. In 2018, the company received
a capital increase of EUR 40 million from its parent, which
substantially strengthened its capital base to approximately EUR 58
million by year-end 2018. Partially offsetting rating factors include
the company’s high dependence on reinsurance and elevated investment
risk due to the company’s material allocation to higher risk assets.

Credendo – Single Risk’s technical results remained poor in 2018, with a
combined ratio of more than 200% for the year. The company has reported
technical losses each year since 2015, with combined ratios ranging
between 97% and 109% in the 2014-2017 period. The weak underwriting
result in 2018 was largely driven by significant reserve strengthening
and an increase in the expense ratio as a result of a decline in net
earned premiums. AM Best expects prospective performance to improve from
the 2018 level, reflecting tighter underwriting guidelines and a return
to premium growth. However, performance will remain subject to
volatility as the company’s credit insurance portfolio is exposed to
fluctuating economic and political conditions in emerging markets.

Credendo – Single Risk’s limited business profile reflects its
relatively small size and absence of diversification as a monoline
credit insurer operating in a highly competitive market environment.

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 Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

Konstantin Langowski
Financial Analyst
+31 20 308 5431
konstantin.langowski@ambest.com

Dr. Angela Yeo
Senior Director, Analytics
+31 20 308 5421
angela.yeo@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439
2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext.
5644
james.peavy@ambest.com