AM Best has withdrawn its ratings for Evergreen Insurance Company Ltd after the Bermudian-based company requested to no longer participate in the credit rating agency’s interactive rating process.

The news came as the agency affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent) of Evergreen, the Class 2 insurer licensed and regulated by the Bermuda Monetary Authority.

AM Best said the outlook of these credit ratings is stable.

The ratings reflect EICL’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The ratings also reflect the parental support EICL receives from Evergreen International SA and Evergreen International Corporation in terms of capital, business development, operations and risk management.

EICL’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which was at the strongest level at year-end 2023, as measured by Best’s capital adequacy ratio.

The agency said: “Despite the significant projected decline in the absolute capital level as per the company’s capital and business plan, AM Best expects EICL’s risk-adjusted capitalisation to be maintained at the strongest level in the intermediate term due to the significantly reduced underwriting risks.

“Other supportive factors of the balance sheet strength include a highly liquid and conservative investment portfolio, a track record of prudent reserving, and a comprehensive reinsurance programme.”

AM Best added: “As a pure captive of Evergreen Group, EICL’s in-force underwriting portfolio primarily consists of marine, aviation and property risks related to the group’s operations.

“The company has ceded the majority of its risk exposures to a panel of financially sound reinsurers and maintained a low retention ratio.

“EICL’s overall capital position and profitability have been stable over the past five years, owing to prudent underwriting practices, conservative reserving assumptions and long-term reinsurance relationships. EICL’s risk management is well-embedded into the group’s risk framework and is viewed as appropriate to support its risk profile.”

The agency said EICL’s five-year average return-on-equity ratio was 12.2 per cent (2019-2023). The company recorded strong double-digit growth in net operating income during the first nine months of 2024, driven by profitable underwriting and higher investment income. However, minimal prospective earnings are projected in 2025 and 2026 based on its business plan.

AM Best said: “EICL has historically been a beneficiary of support from its shareholders and the wider parent group. AM Best expects EICL’s shareholders will remain committed and continue to render support to the company over the short to intermediate term in terms of capital, risk management and operations, if needed.”