Best Upgrades Issuer Credit Rating of ACE European Group; Affirms FSR

June 21, 2011

A.M. Best Europe – Rating Services Limited has upgraded the issuer credit rating (ICR) to “aa” from “aa-” and affirmed the financial strength rating (FSR) of ‘A+’ (Superior) of the UK-based ACE European Group Limited (AEGL). The outlook for the ICR has been revised to stable from positive, while the outlook for the FSR is stable.

Best explained that the rating upgrade reflects the implicit support provided to AEGL by its parent company, Zurich-based ACE Limited, and “AEGL’s importance within the ACE group, which benefits from a diversified global operation and a consistently favorable record of generating strong earnings and cash flows.

“AEGL continues to be of strategic significance to its parent company as its main underwriting operation in the United Kingdom and Europe. In addition, the company receives significant reinsurance support from ACE group affiliates. The ratings further reflect AEGL’s excellent stand alone risk-adjusted capitalization, solid operating performance and excellent business profile.”

Best also indicated that it expects AEGL” to maintain excellent stand alone risk-adjusted capitalization in 2011, supported by solid retained earnings. In 2010, a dividend payment was made following the strong operating performance in 2009.”

The company is expected to “achieve a good technical result in 2011, albeit reduced from the £29.2 million [$47.89 million] reported in 2010, as market conditions continue to be challenging, Best continued. “In 2010, AEGL benefited from an improvement in pricing in certain lines of its London market business and growth within its specialty personal lines and UK retail divisions.”

Best also pointed out that, “of the various natural catastrophes that occurred in the early months of 2011, the company has modest exposure to the Australian floods and Japanese earthquake and tsunami. Assuming normal catastrophe experience for the remainder of the year, a solid operating performance is accordingly anticipated in 2011, supported by good investment earnings.

AEGL has an excellent business profile in its core UK and continental European markets, as an underwriter of a well-diversified portfolio of property and casualty, accident and health and specialty personal lines insurance. Business is underwritten through three well established brands: ACE Europe, ACE Global Markets and ACE Tempest Re Europe.”

Source: A.M. Best

Topics Europe

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