Best Assigns ‘B++’ Rating to Infrassure Ltd.

July 7, 2003

A.M. Best Co. announced that it has assigned an initial financial strength rating of B++ (Very Good) to Swiss-based Infrassure Ltd., formerly Alstom Power Insurance Ltd., with a “stable” outlook.

Best said the rating “action reflects Infrassure’s excellent capitalisation, very good business position in the specialist engineering insurance market and prospectively very good underwriting performance. An offsetting factor is the inherent volatility of its book of business.”

In further detail it described Infrassure’s risk-adjusted capitalization as “excellent based on A.M. Best’s capital model, despite a reduction in shareholders’ funds earlier this year. In addition, Infrassure benefits from a reinsurance protection from highly rated reinsurers, limiting the aggregate loss arising from severe individual claims to CHF 15 million (USD 11 million) per year.”

The company acquired the book of business from the former captive insurer of the Alstom group, which has given it a “very good business position.” Best explained that “this operation was initially established to provide engineering insurance for Alstom’s power plants projects, it has successfully expanded into third-party business, accounting for approximately 65% of gross premiums.” The rating agency said it “believes that Infrassure’s risk management and underwriting capabilities provide a very good platform to carefully expand its business model in this specialist segment.”

Best also pointed out that, “As a result of selective underwriting and risk management, the former Alstom Power Insurance was profitable since its inception in 1996. However, due to the nature of the risks it wrote, loss ratios have been volatile. A.M. Best expects Infrassure to continue its prudent underwriting and risk management strategy. The aggregate excess of loss reinsurance protection should stabilise bottom line results.”

The bulletin also noted that “Infrassure’s book of business currently comprises predominantly relatively volatile power plant risks, although its very strong risk management approach aims to limit this exposure. Infrassure is actively seeking to reduce its dependence upon this single type of risk by developing other engineering insurance products.”

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