AM Best Affirms Credit Ratings of Sveriges Ångfartygs Assurans Förening (The Swedish Club)

AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-” of Sveriges
Ångfartygs Assurans Förening (The Swedish Club) (The Club or TSC)
(Sweden). The outlook of these Credit Ratings (ratings) is stable.

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

TSC’s balance sheet strength is underpinned by risk-adjusted
capitalisation at the strongest level, as measured by Best’s Capital
Adequacy Ratio (BCAR). The Club’s free reserves have grown by an annual
compound rate of approximately 7% over the past five years (2013-2017).
The Club maintains a good liquidity profile, with the majority of its
investment portfolio allocated to securities that are listed in active
markets.

In 2017, the combined ratio increased to approximately 105% (2016: 98%),
due to a higher frequency of small losses and a declining premium base.
In spite of this, the Club generated a return on equity (ROE) ratio of
8.7% (2016: 5.9%), supported by strong investment results. Historical
performance has been moderately volatile, with earnings varying from a
loss of USD 1 million to a profit of USD 18 million over the period 2013
and 2017. AM Best expects TSC to report an operating loss in 2018,
underpinned by a breakeven underwriting result and a negative investment
return. In prospective years, the company is expected to produce low
single-digit ROEs.

TSC maintains a well-diversified portfolio within the marine insurance
market, offering hull & machinery and protection & indemnity (P&I) types
of cover, and benefits from its membership of the International Group of
P&I Clubs. Overall premiums have declined in recent years due to
continued negative pressure on premium rates. However, TSC is
well-positioned to benefit from potential rate improvements in 2019
following the withdrawal of capacity from poorly performing marine
insurance segments.

This press release relates to Credit Ratings that have been published
on AM 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 see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media - Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
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