AM Best Affirms Credit Ratings of ERIKA Försäkringsaktiebolag (publ)

AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of "a-" (Excellent) of ERIKA Försäkringsaktiebolag (publ) (Erika) (Sweden). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Erika's balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

Erika's strongest level of risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), along with its conservative and liquid investment portfolio and prudent reserving, collectively contribute to an overall balance sheet strength assessment of very strong by AM Best.

The company has a track record of strong operating performance, supported by solid technical profitability and demonstrated by a five-year (2018-2022) average combined ratio and return of equity of 93.3% and 5.8%, respectively. The assessment also considers Erika's stable and consistent earnings, with technical surplus reported in each of the past 17 years (2006-2022).

Erika is the primary provider of travel insurance to people travelling worldwide on the various international education programmes offered by Education First (EF). All business is sourced solely from EF tour operators, which limits Erika's control over distribution and growth. Erika's limited business profile assessment also reflects its relatively small portfolio, concentrated within one line of business. However, the risks associated with this concentration are mitigated partially by the company's moderate product risk and good geographic diversification.

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