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A.M. Best Affirms Credit Ratings of Sigurd Rück AGA.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of "a-" of Sigurd Rück AG (Sigurd) (Switzerland). The outlook of these Credit Ratings (ratings) remains stable. The ratings reflect Sigurd's balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). In addition, the ratings factor in rating drag due to the weaker credit profile of its parent company, Saipem S.p.A. (Saipem). Sigurd is a captive reinsurer of Saipem, an Italian multinational group that provides services to the oil and gas sector, including procurement, construction and installation of pipelines, as well as drilling. A.M. Best expects Sigurd's risk-adjusted capitalisation to be maintained at the strongest level, underpinned by internal capital generation. Other rating factors supporting A.M. Best's assessment of balance sheet strength include the captive's conservative investment and reserving policies, its moderate exposure to catastrophe losses and a comprehensive retrocession programme. A partly offsetting rating factor is Sigurd's relatively small capital base, which exposes its risk-adjusted capitalisation to a degree of volatility. In addition, a cash pooling agreement in place with the Saipem group creates concentration risk within Sigurd's asset portfolio. Sigurd has a strong operating track record, demonstrated by an average five-year return on equity of 20% (2012-2016). Profitability has been driven by the underwriting account, which has produced a five-year average combined ratio of 53% (2016: 58%). Althoughprospective performance is likely to deteriorate, due to decreasing premium rates and challenging market conditions affecting the Saipem group, A.M. Best expects the captive to maintain a strong level of profitability. A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best's Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive. This press release relates to Credit Ratings that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases. A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.
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