AM Best Affirms Credit Ratings of Ansvar Insurance Limited

PRESS RELEASE FROM A.M. BEST

SINGAPORE–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Ansvar Insurance Limited (Ansvar) (Australia). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Ansvar’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Ansvar’s balance sheet strength is underpinned by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), reflecting a low level of retained underwriting risk. In addition, the company’s investment portfolio is conservative, being invested in cash and high-grade, fixed-interest securities. Offsetting factors in the balance sheet strength assessment include Ansvar’s modest capital base relative to the high gross policy limits on its property risks, as well as its high reinsurance dependence.

The company’s operating performance is adequate, demonstrated by a five-year average (2014-2018) return on equity of 5.1%. The combined ratio over the same period was 105.2%, due in part to the impact of natural catastrophes. However, results have improved following active restructuring of the underwriting portfolio, and technical profits have been reported in each of the past two years. Over the medium term, AM Best expects the combined ratio to remain below 100%, in line with 2017 and 2018, and exhibit a lower level of volatility.

Ansvar is a small niche insurer that underwrites general insurance products for its target customer groups in Australia (including faith-based, community service organizations, care, education, and property owners including heritage properties). Its core product offerings are property insurance, which is heavily reinsured, liability insurance (including financial lines insurance), and accident cover. Some niche segments of the market are well established for Ansvar. However, AM Best believes this advantage is offset somewhat by the company’s limited control over distribution, due to its reliance on the non-affiliated broker channel, as well as the strong competition for targeted business. AM Best is closely monitoring the company’s ability to translate its position in its niche markets into profitable underwriting results, and deterioration in performance could lead to negative rating actions.

Ratings are communicated to rated entities prior to publication. There have been no changes to the ratings since that communication, unless otherwise stated.

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 Understanding 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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