A.M. Best Co. has affirmed the financial strength ratings of ‘A-‘ (Excellent) and the issuer credit ratings of “a-” of Swiss-based Infrassure Ltd. and its affiliate, Infrassure Ltd., Vaduz, which is based in Liechtenstein.
The outlook for all of the ratings remains stable.
The ratings of Infrassure reflect the company’s “strong risk adjusted capitalization, good, albeit volatile, underwriting record and good business profile as a specialist engineering and industrial property insurer,” Best explained.
The ratings of Infrassure Vaduz reflect the “significant support provided by its parent in the form of a 90 percent quota share reinsurance agreement. Infrassure Vaduz remains strategically important to Infrassure as its sole insurance operation in the European Union.”
Best also noted that “Infrassure’s risk adjusted capitalization remains strong but volatile due to changes in premium volume as the company responds to market conditions. For 2010, the company took the strategic decision to increase its premium retention, which contributed to an increase in net written premium and a higher capital requirement. Risk adjusted capitalization is expected to improve in 2011, supported by retained earnings as well as a reduction in net premiums written as the company responds to softer market conditions.”
In addition the company reported a pre-tax loss of CHF 10.2 million [$13.2 million] for the first six months of 2011, due to large losses from the earthquake and tsunami in Japan and an oil sands fire and explosion in Canada.
However, Best indicated that, despite the losses, it expects Infrassure to make a “solid, albeit lower, profit” for the full year. The impact of large losses in 2010 from the earthquake in Chile, and to a lesser extent, the earthquake in Haiti resulted in Infrassure reporting a reduced, but nevertheless good, net income after tax of CHF 27.0 million [$35 million] in 2010, compared to CHF 96.4 million [$125 million] in 2009. In addition, Best noted that the 2010 results “were negatively affected by a net foreign exchange loss of CHF 15.6 million [$20.2 million] as the Swiss Franc continued to appreciate against the US Dollar and Euro, Infrassure’s main trading currencies.”
Infrassure is a leading specialist in engineering insurance and industrial property risks and enjoys a solid niche position in this sector. The company benefits from the combination of specific engineering knowledge and insurance expertise in its underwriting function. In 2011, Infrassure’s gross written premium is expected to reduce by approximately 30 percent as the company responds to increased price competition within its core markets.
Source: A.M. Best
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