AM Best affirms UnipolRe ratings after cat XoL withdrawal
AM Best has affirmed UnipolRe’s financial strength rating of A- and long-term issuer credit rating of a-, after the carrier decided to drop cat excess-of-loss (XoL) business.
This publication revealed on Monday that UnipolRe has become the first carrier to cease XoL cat business based on the impact of climate change.
AM Best, which assigned a stable outlook for UnipolRe’s ratings, said the ratings reflect the carrier’s balance sheet strength, adequate operating performance, limited business profile and appropriate enterprise risk management.
The agency noted that UnipolRe’s operating performance has been “modest” in recent years, with underwriting losses offset by positive investment returns.
It added that, after booking a significant net loss of EUR48.4mn ($54.9mn) for the first nine months of 2021 due to catastrophe events, UnipolRe is expected to receive capital support from parent UnipolSai, with improved underwriting results expected in 2022. AM Best said this would offset the impact of the loss on its solvency position.
UnipolRe reported EUR208mn in gross written premium (GWP) in 2020, down 21% from 2019, and GWP is expected to reduce further in 2022 as the carrier drops non-proportional cat business.
AM Best noted that the XoL cat portfolio is “somewhat concentrated”, with motor business representing 66% of premiums in 2020.