13 July 2015Actuarial & underwriting

Fitch rates Mutual & Federal captive

Rating agency Fitch has assigned Mutual & Federal Risk Financing a national insurer financial strength rating of ‘AAA’.

Mutual & Federal Risk Financing is a wholly owned subsidiary of short-term insurer Mutual & Federal (M&F), which supports its alternative risk transfer insurance activities, a core activity for M&F.

Its main purpose is to house cell captive business, which it is separately licensed to write, sold through M&F's corporate and niche business division.

In 2014, Mutual & Federal Risk Financing wrote 9.1 percent of the M&F group gross written premiums, and through its cell captive structure retains only a small portion of the overall risk. It reported an underwriting margin of 16 percent.

“Fitch believes that Mutual & Federal Risk Financing is adequately capitalised based on the minimum statutory requirement,” said the rating agency.

“At end-14 Mutual & Federal Risk Financing's international solvency ratio was 109 percent, and its interim measures capital adequacy requirement cover 315 percent. Fitch believes that M&F RF would be able to call on cell owners' capital and group support, should the need arise.”