AMSTERDAM–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a+” (Excellent) of Atradius Crédito y Caución S.A. de Seguros y Reaseguros (ACyC) (Spain), Atradius Reinsurance Designated Activity Company (ARe) (Ireland), Atradius Trade Credit Insurance, Inc. (ATCI) (U.S.) and Atradius Seguros de Crédito, S.A. (Atradius Mexico) (Mexico). Concurrently, AM Best has affirmed the Long-Term Issue Credit Rating of “bbb” (Good) of the EUR 250 million, 5.25% subordinated fixed to floating rate guaranteed notes, due 2044, issued by Atradius Finance B.V. (Netherlands) and unconditionally and irrevocably guaranteed on a subordinated basis by Atradius N.V. (Atradius) (Netherlands). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Atradius’ balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management. The ratings of ACyC, ARe, ATCI and Atradius Mexico consider their strategic importance to Atradius as its primary underwriting entities in the group’s key markets around the world.
Atradius’ balance sheet strength is underpinned by its consolidated risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which remained at the strongest level at year-end 2021. AM Best expects Atradius’ prospective risk-adjusted capitalisation to be maintained at the strongest level, supported by good internal capital generation over the cycle and conservative capital management. The group’s balance sheet strength assessment also benefits from its good liquidity profile and relatively conservative investment portfolio. A partly offsetting factor in the assessment is the group’s relatively high dependence on reinsurance, although the risks associated with this dependence are partially mitigated through the use of a well-diversified panel of reinsurance counterparties of excellent credit quality.
Atradius has a track record of strong operating performance, as evidenced by a 10-year (2012-2021) weighted average return on equity of 11% and a weighted average combined ratio of 76%, (as calculated by AM Best), supported by several years of relatively benign claims experience. Atradius’ credit insurance business returned a combined ratio of 69% in 2021 reflecting unusually low claims frequency. This compares to a combined ratio of 91% for 2020, which includes the prudent claims reserves established in light of significant economic and global trade disruptions related to the impact of the COVID-19 pandemic. AM Best believes that Atradius’ strong underwriting expertise and exposure management, together with its ability to take prompt risk-mitigating actions on non-performing business, will allow it to maintain a strong performance record over the cycle.
Atradius benefits from a leading position in the global credit insurance market, which is characterised by high barriers to entry. Although the group is largely a monoline insurer, its exposures are well-diversified by geography and industry. Atradius’ favourable business profile is underpinned by its good access to key markets as a result of the group’s strong global franchise and comprehensive network of agents and intermediaries.
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