Energy industry mutual, Bermuda-based Associated Electric & Gas Insurance Services Limited (AEGIS) has just had its credit rating affirmed by ratings agency AM Best.

Best said the outlook of the financial strength rating is stable, affirmed at A (Excellent) with the Long-Term Issuer Credit Rating of “a” (Excellent).

Best said the ratings reflect AEGIS’ balance sheet strength, assessed as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

With Total assets of $8.6 billion, AEGIS provides liability and property coverage, as well as related risk management services, to the energy industry.

It was incorporated in Bermuda in 1971 and commenced underwriting activities in 1975. Today, it is a Class 3 Insurer on the Island.

Last year, the mutual wrote $2.1 Billion in gross premiums, had a combined ratio of 89 per cent and reached a record policyholder surplus of $1.9 billion.

Policyholders represent virtually the entire energy infrastructure in North America, including electric and natural gas utilities, related energy companies, oil & gas exploration and production companies, water utilities, and transmission & distribution companies.

Best said AEGIS’ strategy emphasizes risk diversification and a relatively conservative approach to capital preservation.

The diversification is achieved through the successful combination of energy mutual operations in the United States with Lloyd’s Syndicate 1225 in uncorrelated lines of business.

The rating agency said AEGIS continues to maintain the strongest level of capitalisation as measured by Best's Capital Adequacy Ratio and has grown surplus consistently over the past 10 years.

Best said: “AEGIS' historical focus on the US and Canadian utility industry has in the past resulted in unfavourable loss experience in certain lines of business, although the diversification benefit from its Lloyd's syndicate has made volatility less frequent.

“Management continues to focus on the company’s operating performance by improving its risk management strategies, including premium rate adjustments, continued refinement of its underwriting criteria and the prudent use of available reinsurance protection and modest limits.

“AEGIS continues to demonstrate a high member retention ratio, an adaptive and highly responsive management team and the continued expansion of programs within its corporate mission.

“Factors that could lead to positive rating actions for AEGIS are sustained favourable underwriting metrics, supported by strong internal capital generation.

“Factors that could negatively affect the ratings are increased underwriting volatility, significant investment losses or outsize catastrophic events in conjunction with a decline in the risk-adjusted capitalisation.”

AEGIS is an eligible surplus lines insurer in all jurisdictions of the United States. It is subject to United States federal income taxes, files the required tax returns, and maintains a United States trust fund in excess of $250,000,000.

The mutual is also a licensed foreign insurance company in all provinces and territories of Canada and is listed on the general register of foreign reinsurers in Mexico.