News Column

A.M. Best Upgrades Issuer Credit Ratings of Electric Insurance Company and Its Subsidiary

August 12, 2014



OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Besthas upgraded the issuer credit ratings (ICR) to ďa+Ē from ďaĒ and affirmed the financial strength rating (FSR) of A (Excellent) of Electric Insurance Company (Electric) (Beverly, MA) and its wholly owned subsidiary, Electric Insurance Ireland, Limited (EIIL) (Dublin, Ireland). The outlook for the ICRs has been revised to stable from positive. The outlook for the FSR is stable.

The ratings reflect Electricís strong risk-adjusted capitalization, good operating profitability and below average expense ratio. The ratings also take into consideration the value-added commercial insurance services provided to General Electric Company (GE), as well as Electricís strategic importance to GE.

The ratings for Electric are afforded to EIIL primarily due to its affiliation with Electric, its integration into Electricís business plan, as well as its supportive capitalization, profitable operating performance and strategic role in providing commercial lines products to GE in the European Union.

Partially offsetting these positive rating factors are the limitations of Electric and EIILís commercial lines business to one policyholder (GE). While the company has exposure to catastrophe losses from a potential terrorist attack, mainly within the workersí compensation line should the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) not be extended beyond 2014, the exposure has been decreasing. Concerns are further mitigated by company efforts to devise a comprehensive plan to mitigate its exposure to the potential loss of TRIPRA protection. Although surplus and risk-adjusted capitalization could be materially depleted from a terrorist attack without TRIPRA protection, A.M. Best believes that capitalization would continue to support Electricís ratings based on its modeling and current reinsurance program.

Favorable ratings consideration would be given for continued profitability and capital appreciation. The ratings may come under negative pressure if there were a material weakening in capitalization, or a significant increase in the company's net terrorism exposure. A reduction in its business profile or strategic importance to General Electric could also result in negative rating movement.

The methodology used in determining these ratings is Bestís Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestís rating process and contains the different rating criteria employed in the rating process. Bestís Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.






A.M. Best

Jacqalene Lentz

Senior Financial Analyst

(908) 439-2200, ext. 5762

jacqalene.lentz@ambest.com

or

Greg Williams

Assistant Vice President

(908) 439-2200, ext. 5815

greg.williams@ambest.com

or

Christopher Sharkey

Manager, Public Relations

(908) 439-2200, ext. 5159

christopher.sharkey@ambest.com

or

Jim Peavy

Assistant Vice President, Public Relations

(908) 439-2200, ext. 5644

james.peavy@ambest.com



Source: A.M. Best


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