AM Best has upgraded the Financial Strength Rating to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating to “a-” (Excellent) from “bbb+” (Good) of Sigurd Rück AG (Sigurd) (Switzerland). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Sigurd’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings also factor, in the form of drag, Sigurd’s association with its parent company, Saipem S.p.A. (Saipem). Sigurd is a captive reinsurer of Saipem and a key element of the group’s risk management framework.

The rating upgrades reflect the stabilisation of Saipem’s credit fundamentals, which have improved over recent years as a result of the successful implementation of a strategic turnaround plan. The plan was announced in 2022, immediately after Saipem had announced a material loss after tax, and included a EUR 2.0 billion capital injection from its shareholders.

Sigurd’s very strong balance sheet strength assessment is underpinned by its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects Sigurd’s risk-adjusted capitalisation to remain comfortably at the strongest level, supported by moderate exposure to catastrophe losses and a comprehensive retrocession programme with retrocessionaires of superior credit quality.

Sigurd is exposed to concentration and credit risk due to a cash-pooling agreement with the Saipem group, which acts as a partially offsetting factor in the assessment. As of 31 December 2023, the funds that Sigurd allocated to the cash-pooling with Saipem represented 52.9% and 61.6% of its total assets and capital and surplus, respectively, which compares with 53.4% and 70.3% at year-end 2022.

Sigurd has a record of strong operating performance, evidenced by a five-year (2019-2023) weighted average return-on-equity and combined ratio of 11.1% and 66.1%, respectively (as calculated by AM Best). Profitability has been supported by a low and stable expense ratio and a good, albeit volatile, loss ratio.

Sigurd’s business profile assessment benefits from its role as an important risk management tool for its parent, along with geographic and product diversification derived from Saipem’s wide-ranging commercial activities.

AM 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 AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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