AMSTERDAM–(BUSINESS WIRE)–#insurance–AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of S2C S.p.A. Compagnia di Assicurazioni di Crediti e Cauzioni (S2C) (Italy). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect S2C’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).
S2C’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), improved to the strongest level at year-end 2020 (from very strong in 2019). AM Best expects the company’s risk-adjusted capitalisation to remain at least at the very strong level prospectively. Offsetting factors in the balance sheet strength assessment include the company’s limited financial flexibility, its material, albeit reduced, exposure to Italian government bonds and its small capital base, which increases the potential for volatility in risk-adjusted capitalisation. Dependence on reinsurance is high, although the risks associated with the dependence are mitigated somewhat by the company’s long-standing relationships with reinsurers of excellent credit quality.
S2C has a track record of good operating profits, driven by its robust underwriting performance that is demonstrated by a five-year average weighted combined ratio of 68% (2016-2020). In 2020, the combined ratio decreased to 58% (2019: 77%) due to an improvement in the loss experience and a reduction in the operating expenses ratio driven by an increase in earned premiums. Although net results since 2012 have been good, AM Best notes that prospective performance may be volatile due to movements in the supplementary unearned premium reserve (required by local regulation) and the potential for fluctuations in loss experience from the company’s surety business.
S2C is a niche mono-line insurer that focuses on the highly competitive surety market in Italy. The company leverages its specialist expertise to compete against larger players and maintains sustainable premium rates. S2C has a developed ERM framework, with clear risk appetite and tolerance levels in place.
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 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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