A.M. Best has affirmed the Financial Strength Ratings of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of Axéria Prévoyance (Axéria) (France) and Axeria Re Limited (Axeria Re) (Malta). The outlook of these Credit Ratings (ratings) remains stable.
The ratings of Axéria reflect its balance sheet strength, which A.M. Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Axéria’s balance sheet strength assessment is underpinned by the company’s strongest risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), good asset quality, liquid investment portfolio and history of prudent reserving. A.M. Best expects risk-adjusted capitalisation to remain more than sufficient to absorb higher underwriting risks emanating from the company’s strategic development plan. In recent years, Axéria’s capital base has been strengthened through good earnings retention, with a dividend payout ratio of approximately 50%. Partially offsetting the balance sheet assessment is Axéria’s high dependence on reinsurance support.
Axéria’s business profile benefits from the strong market position of April S.A. (April), the holding company of the April group, a leader in France’s wholesale insurance brokerage sector. Axéria underwrites the group’s core business lines of corporate health and protection, individual health and credit insurance and is able to leverage April’s excellent distribution capabilities. Despite regulatory changes increasing competitive pressures within the health and loan insurance segments in France, Axéria has demonstrated its resilience by maintaining its technical margin through market segmentation and disciplined risk selection.
Axéria has a track record of solid operating performance, with a five-year average (2013-2017) return on equity of 7.8%. Axéria has continued to report good technical performance, although has seen some volatility in recent years. A.M. Best expects the company’s operating performance to remain adequate, supported by good technical performance and solid investment returns.
The ratings of Axeria Re reflect its balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate ERM. The ratings also factor in rating enhancement given Axeria Re’s strategic importance to Axéria and the wider April group, as an internal reinsurer, providing reinsurance capacity and support to the group’s principal risk carriers, and in particular as a pivotal reinsurance partner for Axéria. Additionally, since 2015, Axeria Re has been providing stop-loss retrocession protection to Axéria’s external reinsurers, reinforcing its importance to the group.
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