AM Best has removed from under review with negative implications and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Aetna Insurance Company Limited (AICL) (United Kingdom). The outlook assigned to these Credit Ratings (ratings) is negative.
The ratings reflect AICL’s balance sheet strength, which AM Best assesses as very strong, as well as the company’s marginal operating performance, limited business profile and appropriate enterprise risk management. Furthermore, AICL’s ratings factor in rating enhancement from the Aetna organisation.
The ratings have been removed from under review with negative implications as AM Best has completed its assessment of the impact of placing the company’s portfolio into run-off. The company has received regulatory and court approval to proceed with communications to all impacted stakeholders to notify of the intention to transfer the portfolio liabilities, and a clear execution timetable has been set out. The negative outlooks assigned to these ratings reflect AM Best’s expectation that following the portfolio transfer, AICL’s strategic importance to the Aetna organisation will diminish.
AICL’s risk-adjusted capitalisation was at the strongest level at year-end 2022, as measured by Best’s Capital Adequacy Ratio (BCAR). The assessment considers a conservative investment strategy and AICL being insulated from adverse reserve development, through a 100% quota share with an affiliated insurer within the Aetna organisation.
AICL has a track record of marginal operating performance. Given that the company has entered into run-off, AICL is expected to produce marginal losses with general administrative expenses, partially offset by modest investment returns.
AM Best considers AICL’s business profile to be limited owing to its relatively small size and expectation to fully transfer its portfolio by year-end 2023.
AICL’s receives continued support from the Aetna organisation evident through the quota share reinsurance cover for existing liabilities. Although some capital extraction is anticipated in the medium term, the parent intends to maintain a sufficient amount of excess capital within AICL to ensure policyholder security until liabilities are fully transferred.
This press release relates to Credit Ratings that have been published on AM Best’s 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 Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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Stanislav Stoev, ACCA, CFA
Senior Financial Analyst
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