A.M. Best Assigns Ratings to Tapiola General Mutual Insurance Company.OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating of A (Excellent) and an issuer credit rating of "a" to Tapiola General Mutual Insurance Company (also known as KeskinEninen VakuutusyhtiE Tapiola) (Finland). The outlook for both ratings is stable. The ratings reflect the company's strong consolidated risk-adjusted capitalisation and its excellent business profile in the Finnish market. An offsetting factor is Tapiola's underwriting performance. Strong consolidated risk-adjusted capitalisationCoTapiola's risk-adjusted capitalisation is excellent and has been built up through 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 significant 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 reserves, which A.M. Best regards as capital. A.M. Best regards Tapiola's overall risk profile as low due to its focus on personal lines of business. However, the long tail of claims reserves for motor third party liability and workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. exposes the company to the risk of adverse reserve developments. The company also benefits from an adequate reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. programme placed with highly rated companies. Excellent business position in the Finnish marketCoA.M. Best believes that Tapiola has an excellent position in the Finnish non-life market. The company is the third-largest general insurer with a market share of approximately 18% and is part of a group of mutual companies active in general insurance, life insurance, pension and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. . Tapiola writes a book of business that includes mainly motor, property and workers' compensation insurance. A.M. Best expects Tapiola to increase gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. by approximately 7% to 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. 630 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. 800 million) in 2006. The company is improving its market position due to an effective distribution network and its strong brand despite a relatively mature and concentrated Finnish non-life market. Unprofitable underwritingCoTapiola's underwriting results continue to be negative, mainly driven by compulsory motor third party liability and workers' compensation where compensation is mainly in the form of annuities. However, the long tail of these claims (approximately 10 years) enables Tapiola to compensate underwriting losses through investment income. Technical results are also influenced by the unwinding of the discount for annuities and rebates to policyholders. A.M. Best expects a deterioration of the combined ratio by approximately 2% to 110% in 2006 due to non-recurring costs for investing in claims management and product development as premium rates remain stable. Notwithstanding this, A.M. Best expects Tapiola to achieve an overall after-tax profit of approximately EUR 40 million (USD 51 million) before equalization reserves Equalization Reserve A long-term reserve that an insurance company keeps for the purpose of preventing cash-flow depletion in the event of a significant unforeseen catastrophe. , which translates into a return on premium of 6%. This is supported by strong investment returns, although Tapiola has been reliant upon realised capital gains over the last six years. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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