A.M. Best Affirms Credit Ratings of Aetna Insurance Company Limited
LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Aetna Insurance Company Limited (AIC) (United Kingdom), a subsidiary of Aetna Inc. (Aetna Group) (headquartered in Hartford, Connecticut, USA). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect AIC’s strong risk-adjusted capitalisation, niche business profile and volatile results over the past five years. Furthermore, the ratings consider the financial strength of Aetna Group and its ability to provide financial support to AIC should it become necessary.
AIC’s risk-adjusted capitalisation improved to an excellent level in 2016 as a result of a capital injection of USD 65.5 million. The issue of new share capital followed the transfer of business to AIC from other Aetna subsidiaries, which resulted in increased capital requirements for the company. Risk-adjusted capitalisation is likely to deteriorate as the company grows; however, A.M. Best expects it to remain at a strong level. An offsetting rating factor is the company’s historically volatile underwriting performance. AIC’s five-year average combined ratio based on earned premiums was 101% (2012-2016) and ranged between 96% and 108%. Several one-off factors have negatively impacted AIC’s recent underwriting results; for example, the adoption of the Aetna group’s more conservative reserving practices. A.M. Best believes that the company’s focus on underwriting profitability and more stable growth over the coming two years are likely to support a less volatile and improved underwriting result.
The company’s business profile has benefited from its association with Aetna Group, since its acquisition in 2014. Additionally, A.M. Best believes that AIC benefits from the well-established operational and risk management frameworks of its parent company and the group’s ability to provide financial support should it become necessary.
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