AM Best Affirms Credit Ratings of S2C S.p.A. Compagnia di Assicurazioni di Crediti e Cauzioni
AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of "bbb" (Good) of S2C S.p.A. Compagnia di Assicurazioni di Crediti e Cauzioni (S2C) (Italy). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect S2C's balance sheet strength, which AM Best assesses as adequate, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
S2C's risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), was at the very strong level at year-end 2022. AM Best expects the company's risk-adjusted capitalisation to remain at least at the very strong level prospectively. Offsetting factors in the balance sheet strength assessment include the company's limited financial flexibility, its material exposure to Italian government bonds and real estate investments, as well as its small capital base, which increases the potential for volatility in its risk-adjusted capitalisation. Dependence on reinsurance is high, although this is mitigated somewhat by the company's long-standing relationships with reinsurers of excellent credit quality.
S2C has a strong track record of underwriting performance, as demonstrated by a five-year weighted average combined ratio of 61.4% (2018-2022), as calculated by AM Best. In 2022, the combined ratio remained good at 54.6% (2021: 55.8%), as calculated by AM Best, notwithstanding a deterioration in claims' experience during the year that pushed the loss ratio up to 23.5% (2021: 9.3%). AM Best notes that prospective performance may be volatile due to movements in the supplementary unearned premium reserve (required by local regulation) and the potential for fluctuations in loss experience from the company's surety business.
S2C is a niche mono-line insurer that focuses on the highly competitive surety market in Italy. The company leverages its specialist expertise to compete against larger players and maintains sustainable premium rates. S2C has a developed ERM framework, with clear risk appetite and tolerance levels in place.
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 use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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