2014-04-25 16:05:05 -
A.M. Best has affirmed the financial strength rating of A (Excellent) and issuer credit ratings of “a+” of AGA International SA (AGAI SA) (France) and its subsidiary, Jefferson Insurance Company (Jefferson) (New York, NY). The outlook for all ratings remains stable.
The ratings reflect AGAI SA’s adequate risk-adjusted capitalisation, continued good operating performance and excellent business profile as a leading worldwide travel insurance and assistance provider. The ratings also take into consideration the implicit support of AGAI SA’s ultimate parent, Allianz SE (Allianz).
The ratings of Jefferson reflect enhancement due to the explicit support it receives from AGAI SA in the form of an 80% quota share reinsurance treaty.
AGAI SA’s risk-adjusted capitalisation is expected to remain in line with the ratings in
2014, supported by retention of profits. The company’s capitalisation benefits from the low underwriting volatility inherent in its specialist lines of business. In addition, consistent with the short-tail nature of AGAI SA’s insurance liabilities, its investment portfolio includes predominantly cash and highly liquid investment grade bonds.
While AGAI SA’s profit before tax decreased from EUR 64.3 million in 2012 to EUR 33.4 million in 2013, the operating performance remains good considering the difficult market conditions. The 2013 combined ratio was stable at 96.4%; however, investment income deteriorated due to lower interest rates. A net profit of EUR 20-25 million is anticipated for each of the next few years as AGAI SA is forecast to grow its top line while maintaining its current level of underwriting profitability.
AGAI SA’s main lines of business are travel insurance and roadside assistance, areas where the company has built a strong brand and extensive expertise. Premium income is expected to increase in the range of 8-10% per annum in the next couple of years (from EUR 1,290 million in 2013), largely driven by further business opportunities and leveraging the digital distribution channels (online and mobile connectivity).
Positive movement in AGAI SA’s ratings is considered unlikely in the short term. Negative movement in the ratings could result from a significant deterioration in operating performance, erosion of risk-adjusted capitalisation or a reduction in support from Allianz.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M.
Best Europe - Rating Services Limited Supplementary Disclosure : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
This rating announcement has been issued by A.M. Best Europe – Rating Services Limited, which is a subsidiary of A.M. Best Company.
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