12 September 2016EMEA analysis

AM Best affirms Eni ratings

Rating agency AM Best has affirmed the ratings of Eni Insurance, the captive insurer of Italian gas and oil company Eni.

Eni Insurance’s financial strength rating was affirmed as A (Excellent) and its long-term issuer credit rating was affirmed as 'a'.

The rating agency said the affirmation reflected Eni Insurance’s track-record of strong underwriting profitability and excellent risk-adjusted capitalisation.

The ratings also consider the captive’s importance to the Eni Group as a risk management tool.

“These positive rating factors are partially offset by Eni Insurance’s exposure to peripheral European sovereign bonds. In addition, Eni Insurance has exposure to potentially substantial underwriting losses due to its large gross maximum line size,” said the rating agency.

It added that the captive’s risk-adjusted capitalisation is expected to remain excellent.

The rating agency explained that the company’s prospective performance is subject to volatility due to potential large losses from its property account and unrealised gains/losses from its peripheral European sovereign bond portfolio.

“However, underwriting volatility should be moderated by the captive’s comprehensive reinsurance programme which remains broadly unchanged from the previous year,” added AM Best.