AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of 'bbb+' of
The outlook of the FSR is stable, while the Long-Term ICR outlook is negative.
The Credit Ratings (ratings) of
ERGO Insurance's balance sheet strength assessment is underpinned by risk-adjusted capitalisation that was categorised as strongest in 2019, as measured by Best's Capital Adequacy Ratio (BCAR). Despite operating losses over the past few years having materially eroded the company's shareholders' equity, financial support from the
AM Best views the company's operating performance as marginal. Poor claims experience from motor and workers' compensation business, coupled with increasing expense ratios as the company has sought to non-renew loss-making accounts, have driven a five-year average combined ratio of 125.3% (2015-2019). Whilst investment operations have contributed positively to overall earnings, technical results have led to pre-tax operating losses in each year since 2016. Over the past two years, management has made progress in implementing a program of remedial actions in conjunction with support provided by the
AM Best views
The company receives rating enhancement from its ownership and integration with the
The negative outlook on the Long-Term ICR reflects AM Best's expectation of continued pressure on the company's operating performance and balance sheet strength fundamentals over the near term. Whilst the company continues to execute a viable turnaround strategy, in conjunction with support from the
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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.
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