Aegis has financial strength affirmed by AM Best

AM Best has affirmed the financial strength rating of A (‘excellent’) of Bermuda-domiciled Associated Electric & Gas Insurance Services Limited (Aegis). The outlook is stable.

The rating reflects Aegis’ balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

“Aegis’ strategy emphasises risk diversification and a relatively conservative approach to capital preservation,” the agency said. “This diversification is achieved through the successful combination of its energy mutual operations in the United States with Lloyd’s Syndicate 1225 in uncorrelated lines of business.”

Aegis continues to maintain the strongest level of risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, and has grown surplus “consistently” over the past 10 years, the agency said.

Aegis’ historical focus on the US and Canadian utility industry has in, the past, resulted in “unfavourable loss experience” in certain lines of business, although the diversification benefit from its Lloyd’s syndicate has continued to stabilise underwriting performance, it added.

Factors that could lead to positive rating actions for Aegis are sustained favourable underwriting metrics, supported by strong internal capital generation. Factors that could affect the ratings negatively are increased underwriting volatility, significant investment losses or outsized catastrophe events in conjunction with a decline in the company’s risk-adjusted capitalisation.