AM Best has revised its outlook for Ansvar Insurance to stable from negative and affirmed its A- rating after increased financial and reinsurance support provided to Ansvar by its UK-based owner Ecclesiastical Insurance Office (EIO).

The ratings agency assesses Ansvar’s balance sheet strength as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.

Ansvar’s ownership, integration and support from EIO is “an effective response to counteract recent pressure on Ansvar’s operating performance and balance sheet strength fundamentals,” AM Best said.

Over the past three years, Ansvar has exhibited heightened volatility and a deteriorating trend in operating performance, with its underwriting results hampered by weather-related events, covid provisioning and material reserve increases emanating from physical and sexual abuse (PSA) claims.

Last year, it recorded an operating loss and a net combined ratio in excess of 130%, driven by a higher-than-expected volume of new PSA claims from legacy exposures.

“EIO has taken a series of actions in support of Ansvar’s response to these performance pressures and to mitigate the impact on the company’s balance sheet strength position. Recent and planned capital injections from the parent have helped to bolster Ansvar’s capital adequacy and offset the adverse impact of covid provisions and material increases in PSA reserves,” AM Best said, adding its risk-adjusted capitalisation was “at the very strong level in 2021”.

EIO is also providing significant intra-group reinsurance protection to Ansvar this year, including the renewal of a PSA excess-of-loss cover and the placement of a new stop loss program, both of which are expected to substantially limit downside risk to operating performance and balance sheet strength fundamentals over the near term.

"AM Best expects Ansvar and EIO to continue to review and consider the requirement for these intra-group reinsurance arrangements, with group support expected to remain available if Ansvar’s performance volatility persists,” the agency said.