|[August 12, 2014]
A.M. Best Upgrades Issuer Credit Ratings of Electric Insurance Company and Its Subsidiary
OLDWICK, N.J. --(Business Wire)--
A.M. Best has upgraded the issuer credit ratings (ICR) to "a+"
from "a" and affirmed the financial strength rating (FSR) of A
(Excellent) of Electric Insurance Company (Electric) (Beverly,
MA) and its wholly owned subsidiary, Electric Insurance Ireland,
Limited (EIIL) (Dublin, Ireland). The outlook for the ICRs has been
revised to stable from positive. The outlook for the FSR is stable.
The ratings reflect Electric's strong risk-adjusted capitalization, good
operating profitability and below average expense ratio. The ratings
also take into consideration the value-added commercial insurance
services provided to General Electric Company (GE), as well as
Electric's strategic importance to GE.
The ratings for Electric are afforded to EIIL primarily due to its
affiliation with Electric, its integration into Electric's business
plan, as well as its supportive capitalization, profitable operating
performance and strategic role in providing commercial lines products to
GE in the European Union.
Partially offsetting these positive rating factors are the limitations
of Electric and EIIL's commercial lines business toone policyholder
(GE). While the company has exposure to catastrophe losses from a
potential terrorist attack, mainly within the workers' compensation line
should the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA)
not be extended beyond 2014, the exposure has been decreasing. Concerns
are further mitigated by company efforts to devise a comprehensive plan
to mitigate its exposure to the potential loss of TRIPRA protection.
Although surplus and risk-adjusted capitalization could be materially
depleted from a terrorist attack without TRIPRA protection, A.M. Best
believes that capitalization would continue to support Electric's
ratings based on its modeling and current reinsurance program.
Favorable ratings consideration would be given for continued
profitability and capital appreciation. The ratings may come under
negative pressure if there were a material weakening in capitalization,
or a significant increase in the company's net terrorism exposure. A
reduction in its business profile or strategic importance to General
Electric could also result in negative rating movement.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
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