AMSTERDAM–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of SIAT-Società Italiana Assicurazioni e Riassicurazioni p.A. (SIAT) (Italy), a subsidiary of UnipolSai Assicurazioni S.p.A. (UnipolSai). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect SIAT’s balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The ratings also consider, in the form of rating lift, AM Best’s expectation that UnipolSai will provide financial support to SIAT should it need it. SIAT did not pay a dividend to UnipolSai for the fiscal years of 2018 and 2019.
SIAT’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), was very strong at year-end 2019, with credit risk associated with a high reinsurance recoverables balance representing a substantial part of the capital requirement. Risk-adjusted capitalisation is expected to improve in 2020 due to the settlement of a large claim in the first quarter, and the consequent decrease in reinsurance recoverables, as well as modest internal capital generation.
The company maintains a strong liquidity profile, with liquid investments accounting for approximately 124% of its year-end 2019 net technical liabilities. Offsetting factors in the balance sheet strength assessment include the company’s investment concentration in Italian government bonds and its dependence on reinsurance to write high-value risks.
SIAT has a track record of adequate underwriting performance with volatility contained by an effective reinsurance programme. In 2019, pre-tax profits increased to EUR 1.1 million from EUR 0.5 million in 2018 (adjusted by AM Best for extraordinary income and expenses), due to higher non-technical income. AM Best expects SIAT to achieve a modest return on equity in 2020, supported by selective underwriting and pricing improvements for marine insurance lines.
SIAT has an established reputation as a niche insurer in the marine hull and cargo segments, in which it ranks among the leading players in Italy. In addition, the company’s business profile is strengthened by its reciprocal outsourcing agreements with UnipolSai, a large Italian insurer. SIAT benefits from a developed ERM framework, with the risk function centralised at the group level.
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 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 credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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