AM Best Affirms Credit Ratings of ERIKA Försäkringsaktiebolag (publ)

AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of "a-" 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 categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).

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

Additionally, consistently favourable earnings, including small investment gains, lead to an overall operating performance assessment of strong. The company's strong operating performance track record is demonstrated by a five-year average combined ratio of 90.7% (2014-2018) and a five-year (2014-2018) average return on equity of 8.9%. The company has reported a technical surplus in each of the past 13 years (2006-2018), signifying sound underwriting practices.

Erika is the primary provider of travel insurance to people travelling worldwide on the various international education programmes offered by the Education First (EF) sphere. Erika and its ultimate parent, Universal Care S.à.r.l., are part of the wider EF sphere. Erika's business profile is assessed as limited due to its relatively small and concentrated portfolio, as well as its limited control over distribution and growth. The risks associated with the company's small and concentrated portfolio are mitigated partially by its moderate product risk and good geographical diversification.

Erika's ERM is considered to be developed and appropriate for the company's risk profile and operational scope.

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