AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of 'a-' of Sigurd Ruck AG (Sigurd) (Switzerland).
The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Sigurd's balance sheet strength, which is categorised as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also factor in Sigurd's association with its parent company, Saipem S.p.A (Saipem).
Sigurd is the captive reinsurer of Saipem, a leading company in engineering, drilling and construction of major projects in the energy and infrastructure sectors that has a presence in over 60 countries.
Sigurd's very strong balance sheet strength assessment is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR). AM Best expects Sigurd's risk-adjusted capitalisation to remain at the strongest level, supported by the captive's conservative investment and reserving policies, its moderate exposure to catastrophe losses and its comprehensive retrocession programme with a well-rated panel of retrocessionaires. An offsetting factor is a cash pooling agreement in place with the Saipem group, which exposes the captive's balance sheet to increased concentration and credit risk.
The captive's robust earnings have been driven by a low and stable expense ratio and a good, but volatile, loss ratio. Despite its combined ratio increasing to 71.5% in 2019 (2018: 49.0%), as a result of two relatively large claims incurred during that year, Sigurd's operating performance remains comfortably in line with a strong assessment, underpinned by a five-year (2015-2019) average return-on-equity and combined ratio of 13.4% and 56.1%, respectively. AM Best expects operating performance to improve in 2020 and remain supportive of a strong assessment prospectively.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best's Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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 specialising 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.