AM Best has revised the outlook of Bermuda-based group captive Associated Electric & Gas Insurance Services (AEGIS) from stable to positive and affirmed its financial strength rating of A- (Excellent) and issuer credit rating of ‘a-’.
AEGIS, which is owned by its policyholder-members, is a non-assessable mutual insurance company.
It was formed to serve the utility and related energy industry and now serves a membership that includes gas and electric utilities, related energy companies, oil and gas exploration and production companies, water utilities, and transmission and distribution companies.
AM Best said that the revised outlook reflects AEGIS’s improved risk-adjusted capitalisation and operating performance in the last three years since it suffered a net loss in 2008 as a result of significant investment losses that were caused by the financial crisis.
It added that the company’s surplus has significantly rebounded from 2008 levels and is currently within an appropriate risk tolerance/appetite level.
“The ratings affirmations recognise AEGIS’ solid risk-adjusted capitalisation for its current investment and insurance risks and a historically favourable long-term financial performance, as well as an experienced management team and comprehensive enterprise risk management processes.”
“Reserving practices are adequate for the hazards insured and losses incurred. Partially offsetting these positive rating factors are the volatility inherent in AEGIS’ underwriting results, given the high severity risk profile and concentration risk of the energy market it serves.”
