A.M. Best Affirms Ratings of Sovag.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of B++ (Good) and the issuer credit rating (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "bbb" of SCHWARZMEER UND UND University of North Dakota UND University of Notre Dame UND University of Natal-Durban (South Africa) UND Urgency of Need Designator UND Union Nationale et Démocratique OSTSEE Versicherungs-Aktiengesellschaft SOVAG (Sovag) (Germany). The outlook for both ratings is stable. The affirmation reflects A.M. Best's expectations of a good operating performance in 2007 with an anticipated pre-tax profit of approximately EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 7 million (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 9.5), which would translate into a return on premiums of 10%. A.M. Best believes that the re-pricing of its motor and accident portfolios will improve Sovag's prospective underwriting results while overall earnings are also likely to be supported by an investment yield of approximately 3-4%. Sovag's earnings have shown some volatility in the last few years, especially in its personal lines business where Sovag has had a mixed track record. In 2006 pre-tax profit decreased by 70% to EUR 3.5 million (USD 4.8) due increasing claim levels (following some very good results in 2005) and EUR 2.5 million (USD 3.4) of writedowns on investments. In A.M. Best's opinion, Sovag is likely to maintain its excellent risk-adjusted capitalisation as the forecasted limited growth will be compensated by retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. and further transfers to the equalisation Noun 1. equalisation - the act of making equal or uniform equalization, leveling human action, human activity, act, deed - something that people do or cause to happen provision. Sovag experienced reserves deficiencies in certain lines of business, such as accident and motor in 2004 and 2005. However, as a result of its improved reserving methodology, Sovag achieved a run-off profit of EUR 10 million (USD 13.7) in 2006. A.M. Best expects this trend of run-off profits to continue in 2007 and 2008. A.M. Best believes that Sovag is maintaining its good business position as a specialist non-life insurer for risks relating to the Russian Federation and the Commonwealth of Independent States Commonwealth of Independent States (CIS), community of independent nations established by a treaty signed at Minsk, Belarus, on Dec. 8, 1991, by the heads of state of Russia, Belarus, and Ukraine. Between Dec. 8 and Dec. (CIS Cis (sĭs), same as Kish (1.) (1) (CompuServe Information Service) See CompuServe. (2) (Card Information S ). As Sovag continues to consolidate its business and control premium growth, gross written premiums are expected to increase only marginally (by 1.5%) to EUR 101 million (USD 138) in 2007, with the growth stemming from the broker driven property and motor lines of business. However, A.M. Best believes that Sovag is not benefiting from the strong growth opportunities in its parent's and other CIS markets. For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion