Electrical Contractors’ Insurance Company gets ratings boost

The Electrical Contractors’ Insurance Company Limited (ECIC), a division of EC Insurance, has been assigned a financial strength rating of A- (Excellent) and an issuer credit rating of "a-" by AM Best.

The outlook for both ratings is stable.

AM Best said: “ECIC's risk-adjusted capitalisation is strong and expected to improve in 2010, driven by de-risking of its investment portfolio and an increase in retained earnings.

"An offsetting factor is the high reliance on third party reinsurance, particularly quota share agreements, with the company ceding approximately 50% of gross premiums written.

"This exposes ECIC to upward movement in reinsurance rates and credit risk. Concern is partly mitigated by the company's consistent technical profitability, from which quota share reinsurers benefit, and the good credit quality of reinsurers used."

It continued: “In 2010, a good combined ratio between 80% and 90% is anticipated, despite challenging market conditions in the UK. ECIC has a good underwriting record, which is underpinned by excellent knowledge of its core market.

"In 2009, the company produced a strong combined ratio of 81%, despite reserve strengthening for discontinued business and above average large loss experience. Prospective investment performance is expected to be less volatile than in the past, owing to a reallocation of a proportion of investments from equities to high quality fixed income securities."

Roger Brown, managing director of ECIC, said: “We are pleased to receive acknowledgement of our strong underwriting and distribution capabilities from AM Best. An A- rating sends a message to our customers and potential customers that we are a strong, well-managed business.

“This is an exciting time for ECIC as we begin to roll out new products and services alongside a new web-enabled trading environment. Our strong trading position combined with our specialist contractor underwriting team provides a unique opportunity to grow and develop our business in close partnership with the ECA and other specialist contracting associations.”