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A.M. Best Assigns Credit Ratings to ERIKA Försäkringsaktiebolag (publ)
[June 22, 2018]

A.M. Best Assigns Credit Ratings to ERIKA Försäkringsaktiebolag (publ)

A.M. Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of "a-" to ERIKA Försäkringsaktiebolag (publ) (Erika) (Sweden). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Erika's balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

Erika's balance sheet strength is underpinned by risk-adjusted capitalisation that is at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR), and prudent reserving, as well as a conservative and liquid investment portfolio. Its investments consist of cash and an intragroup cash pooling agreement with its ultimate parent, Universal Care S.à.r.l. (UCS). Erika makes use of this facility to mitigate foreign exchange volatility and manage liquidity requirements. An offsetting factor in the balance sheet strength assessment is the company's significant exposure to credit risk associated with reinsurance recoverables from Erika's sole reinsurer, which does not have a credit rating.

Erika has a strong operating performance track record, as demonstrated by a five-year average combined ratio of 91% (2013-2017) and a five-year (2013-2017) average return on equity of 10.8%. The company has reported a technical surplus in each of the past 12 years (2006-2017), demonstrating sound underwriting practices.

The business profile assessed as limited reflects Erika's mall and concentrated portfolio, as well as its limited control over distribution. Erika is the primary provider of travel insurance to people travelling worldwide on the various international education programmes offered by the Education First (EF) sphere. Erika and its ultimate parent, UCS, are part of the wider EF sphere. The risks associated with the company's small and concentrated portfolio are mitigated partially by its moderate product risk and good geographical diversification.

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

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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