AMSTERDAM–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” of LocalTapiola General Mutual Insurance Company (LocalTapiola) (Finland). The outlook of the FSR is stable, while the outlook of the Long-Term ICR is positive. Concurrently, AM Best has withdrawn these Credit Ratings (ratings) as the company has requested to no longer participate in AM Best’s interactive rating process.
The ratings reflect LocalTapiola’s strategic importance to and integration within LocalTapiola Group (the group), which comprises LocalTapiola, 20 regional non-life insurance companies, LocalTapiola Life, and other service and investment-related companies. LocalTapiola plays a vital role within the wider group, writing certain non-life insurance lines of business and providing centralised group-steering operations.
The ratings are underpinned by the group’s consolidated balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The positive Long-Term ICR outlook reflects AM Best’s expectation that the group will continue to deliver robust operating profits while maintaining its strong competitive position in Finland.
The group’s consolidated balance sheet strength is underpinned by its risk-adjusted capitalisation, which remained at the strongest level as of year-end 2018, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects prospective risk-adjusted capitalisation to remain at the strongest level over the medium term, benefiting from the group’s substantial claims equalisation reserves and low underwriting leverage.
The group’s underwriting results have improved in recent years, supported by good earnings diversification between life and non-life technical profits, and overall operating earnings were supplemented by robust investment returns. The group generated an operating profit of EUR 200 million (as per AM Best calculations) in 2018, underpinned by a technical profit, despite reporting unrealised losses on its equity portfolio. The group generated positive results as of third-quarter 2019, reporting a net profit of EUR 283 million.
The group maintains a leading position in its domestic insurance market as Finland’s largest motor, and second-largest workers’ compensation insurer. The business profile assessment additionally benefits from LocalTapiola’s established and far-reaching distribution network that services its mutual members, involving collaboration with a number of high-profile domestic organisations. An offsetting factor to the assessment is the group’s limited geographical diversification, with its insurance portfolio concentrated exclusively within Finland.
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Jalpa Thanky, FIA
Senior Financial Analyst
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Manager, Public Relations
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Senior Director, Analytics
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Director, Public Relations
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