A.M. Best Affirms Ratings of Aetna Insurance Company Limited

LONDON--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Aetna Insurance Company Limited (Aetna Insurance) (United Kingdom). The outlook for both ratings is stable.

The ratings of Aetna Insurance reflect its supportive level of risk-adjusted capitalisation, improving operating performance and developing business profile. Furthermore, the ratings consider the financial strength of the company’s ultimate parent, Aetna Inc. (headquartered in Hartford, Connecticut, USA) and its ability to provide support to Aetna Insurance, should it become necessary.

Aetna Insurance’s risk-adjusted capitalisation remained supportive of its ratings in 2014, despite higher capital requirements as the company discontinued its outward quota share reinsurance treaty. The company’s prospective risk-adjusted capitalisation is expected to remain strong, driven by internal capital generation.

Following large underwriting losses in 2010 and 2011, Aetna Insurance’s management took a number of corrective actions to de-risk its insurance portfolio, such as implementing price adjustments and non-renewing poor-performing accounts. These initiatives led to a strengthening of the company’s combined ratio to 90.1% in 2014, compared with an average combined ratio of 107.6% between 2009 and 2013. In the medium term, earnings are expected to remain solid, underpinned by Aetna Insurance’s prudent underwriting approach and its effective expense control.

Aetna Insurance’s business profile as a niche global provider of medical insurance solutions for individuals and small- to medium-sized customers continues to evolve. In April 2014, the company was acquired by Aetna Inc., one of the leading U.S. providers of employee health insurance and related products. A.M. Best believes that Aetna Insurance benefits from the technical expertise of Aetna Inc. and its ability to provide financial support to the subsidiary. In A.M. Best’s opinion, Aetna Insurance is strategically important to its parent, as it gives the latter access to international markets.

A change in Aetna Inc.’s ratings may lead to positive or negative rating actions for Aetna Insurance. Additionally, a material decline in Aetna Insurance’s risk-adjusted capitalisation or underwriting performance, or a change in A.M. Best’s view of the significance of the company to Aetna Inc. could translate into negative pressure on Aetna Insurance’s ratings.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilised:

• Catastrophe Analysis in A.M. Best Ratings
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding Universal BCAR

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best
Valeria Ermakova, +(44) 20 7397 0269
Financial Analyst
[email protected]
or
Tim Prince, +(44) 20 7397 0320
Associate Director, Analytics
[email protected]
or
Christopher Sharkey, +(1) 908 439 2200, ext. 5159
Manager, Public Relations
[email protected]
or
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best

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