AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of bbb+ of Protector Forsikring ASA (Protector) (Norway). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Protectors balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Protectors balance sheet strength is underpinned by risk-adjusted capitalisation that AM Best expects to be maintained at the very strong level, as measured by Bests Capital Adequacy Ratio (BCAR), with good internal capital generation supporting the companys growth plans. The balance sheet strength assessment also factors in the companys adequate financial flexibility, as well as a flexible dividend policy. A partially offsetting factor is the companys elevated investment risk exposure due to relatively high allocations toward equities and non-rated bonds, as well as its moderate dependence on third party reinsurance.
Protector has a good historical earnings track record, as demonstrated by a five-year weighted average return on equity of 25% (2013-2017). Underwriting performance has deteriorated in 2018, with a reported combined ratio of 104% for the first nine months of the year, predominantly due to a significant increase in claims frequency and reserve strengthening related to Change of Ownership Insurance. AM Best expects underwriting performance to improve in 2019 following various remedial actions taken by the company to address areas of underperformance. However, prospective combined ratios are expected to be slightly weaker than the five-year weighted average of 91% (2013-2017), due to the cost associated with the companys recent entrance to new markets, as well as competitive conditions across its core segments.
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Established in 2004, Protector benefits from a relatively strong foothold and expertise in the Norwegian commercial and public insurance sector. The company has grown rapidly in recent years, as evidenced by gross written premiums increasing from NOK 1.2 billion (USD 201 million) in 2011 to NOK 4.2 billion (USD 506 million) in 2017. Expansion has principally been driven by the company entering new markets, including Sweden and Denmark, and more recently the U.K. and Finland. To-date, growth has been largely profitable and has enhanced geographical diversification.
This press release relates to Credit Ratings that have been published on AM Bests 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 Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and AM Best Rating Action Press Releases.
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