AM Best upgrades Sigurd Ruck ratings
AM Best has upgraded the financial strength rating from B++ to A- and the long-term issuer credit rating from “bbb+” to “a-” of Sigurd Rück. The outlook of these ratings is stable.
According to AM Best the ratings reflect Sigurd’s balance sheet strength, which it assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings also factor, in the form of drag, Sigurd’s association with its parent company, Saipem. Sigurd is a captive reinsurer of Saipem and a key element of the group’s risk management framework.
The rating upgrades reflect the stabilisation of Saipem’s credit fundamentals, which have improved over recent years as a result of the successful implementation of a strategic turnaround plan. The plan was announced in 2022, immediately after Saipem had announced a material loss after tax, and included a EUR 2.0 billion capital injection from its shareholders.
Sigurd’s very strong balance sheet strength assessment is underpinned by its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best said it expects Sigurd’s risk-adjusted capitalisation to remain comfortably at the strongest level, supported by moderate exposure to catastrophe losses and a comprehensive retrocession programme with retrocessionaires of superior credit quality.
“Sigurd is exposed to concentration and credit risk due to a cash-pooling agreement with the Saipem group, which acts as a partially offsetting factor in the assessment,” said AM Best in a statement. “As of 31 December 2023, the funds that Sigurd allocated to the cash-pooling with Saipem represented 52.9% and 61.6% of its total assets and capital and surplus, respectively, which compares with 53.4% and 70.3% at year-end 2022.”
Sigurd’s business profile assessment benefits from its role as an important risk management tool for its parent, along with geographic and product diversification derived from Saipem’s wide-ranging commercial activities.
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