A.M. Best affirms Ansvar Insurance's 'excellent' ratings

A risk and insurance provider for the faith, community, care, education, and heritage and property owners sectors has maintained its A- (Excellent) Financial Strength Rating and “a-” Long-Term Issuer Credit Rating, both with a stable outlook.

A.M. Best said Ansvar Insurance's ratings affirmation was due to the specialist insurer's very strong balance-sheet strength, adequate operating performance, neutral business profile, and appropriate enterprise risk management.

Ansvar's balance sheet strength reflects its “low business net retention and moderate underwriting leverage,” the ratings agency said. And while Ansvar continues to invest in cash and high-grade fixed-interest securities, “the average duration of its bond portfolio and net claims liabilities is very well-matched.” The agency also noted that the insurer partially mitigated its exposure to property/casualty risks with an "appropriate reinsurance program that has very conservative levels of retention limits.”

From 2010 to 2012, poor underwriting results have led the niche insurer to exit its unprofitable personal lines business and to enforce some measures to remediate the performance of its commercial book. The resulting reduced revenue base, however, has not stopped Ansvar from consistently generating operating profits over the past five years, driven mainly by a steady stream of investment income and a stable net claims ratio of roughly 50%, A.M. Best said.

The ratings agency also believes that Ansvar will retain positive operating results and gradually improve over time despite the company's high expense ratio as long as it “continues to focus on strong customer retention and pursues profitable growth of its niche businesses.”

Risks-wise, A.M. Best said Ansvar’s risk management capabilities are “aligned appropriately with its risk profile” and are “underpinned by the company’s strict underwriting controls, prudent reserving, and low business retention, as well as by various strategic initiatives to develop new business opportunities within its target customer groups.”