Best Revises Infrassure Rating Outlook to Positive; Affirms ‘B++’ Rating

A.M. Best Co. announced that it has revised the rating outlook to positive from stable of Switzerland’s Infrassure Ltd. and has affirmed the group’s “B++” (Very Good) financial strength rating.

“The positive outlook reflects Infrassure’s excellent earnings leading to an improvement in risk-adjusted capitalization and an enhanced business profile,” said Best. “An offsetting factor remains the potential gross volatility in loss experience.”

Best forecast “excellent profits in the range between CHF 20 million (USD 17 million) and CHF 25 million (USD 21.3 million) for the full year 2004–before allocation to equalisation reserves–higher than previously anticipated and driven mainly by strong underwriting performance, but also by a reserve release following a claim withdrawn by a customer.”

Best expects Infrassure to retain significant earnings, which will in turn lead to a “further strengthening of Infrassure’s risk-adjusted capitalisation.” However, it said the company still “remains exposed to loss volatility and is therefore reliant upon reinsurance to protect its capital.”

Best also noted: “Infrassure is also generating more business from brokers and is diversifying into other specialist lines, thus reducing its dependence on business from Alstom (Switzerland) Ltd., whilst remaining focused on power plants.

“The company is also moving away from fronting larger insurance programmes and is writing more gross-for-net business. Consequently, net premiums are likely to increase to approximately CHF 33 million (USD 28.1 million) in 2004 and to approximately CHF 45 million (USD 38.4 million) in 2005.”

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