AM Best affirms Evergreen’s ratings
AM Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a” of Evergreen Insurance Company (EICL) (Bermuda). The outlook for both ratings is stable.
EICL is pure captive of the Evergreen Group and underwrites risks in marine, aviation, property, engineering, motor and other liability in relation to group operations.
AM Best said that the ratings reflect EICL’s contribution to the risk management of Evergreen Group, the firm’s strong risk-adjusted capitalisation, and a favourable track record of underwriting results. They also cover EICL’s “prudent” investment strategy and sound liquidity position.
Offsetting rating factors include EICL’s declining trend in its absolute capitalisation over the past five years. This is mainly due to dividend payments made to the group exceeding the profits it generated despite the fact that no dividend was paid in 2014.
The firm expects growth in the number of insured vessels and aircraft for the Evergreen Group, which will require adequate capital support at EICL. The company’s Best’s Capital Adequacy Ratio is sensitive to a single catastrophic aviation loss scenario, which could give rise to substantial credit or dispute risk associated with a potentially large reinsurance recoverable relative to its capital size.
According to AM Best any upward rating movement is unlikely in the near term, whilst downward rating movement could occur if the declining trend in absolute capitalisation continues or there is a sharp decline in EICL’s risk-adjusted capitalisation.