Strong operating performance has led to credit ratings agency AM Best upgrading Associated Electric and Gas Insurance Services long-term issuer credit rating to “a+” (Excellent) from “a” (Excellent).

AM Best also affirmed the financial strength rating of A (Excellent), but revised the issuer credit rating outlook from positive to stable.

The long-domiciled Bermuda mutual provides liability, property and directors and officers coverage, as well as related risk management services to much of the energy infrastructure of North America.

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

The agency added that Aegis has achieved risk diversification and capital preservation, through a successful combination of its energy mutual operations in North America and uncorrelated lines of business with its Lloyd’s Syndicate 1225.

“The firm continues to maintain the strongest level of risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, supported by consistent surplus growth over the past decade,” AM Best said.

Its historical focus on the United States and Canadian utility industries, and the diversification benefit from its Lloyd’s syndicate, continued to stabilise underwriting performance.

AM Best said Aegis is focusing on its operating performance by improving its risk management strategies, including continued refinement of its underwriting criteria, as well as the prudent use of available reinsurance protection and modest limits.

“Aegis continues to have a high member retention ratio, an adaptive and highly responsive management team and continued expansion of programmes within its corporate mission,” the credit ratings agency said.

The long-term ICR upgrade reflects Aegis’ positive earnings, which have been consistent even in years of large loss events for the industry, and throughout low interest-rate market conditions.

Over the years, Aegis has been able to demonstrate strong underwriting results, grounded in a longstanding commitment to disciplined risk selection and conservative reinsurance practices.

This has been further reinforced by the significant diversification between the mutual and the syndicate and its benefits to the company’s balance sheet.

“The combined performance of these platforms has delivered consistent, stable underwriting results over the past five years, which highlights the unique strategic structure of Aegis,” AM Best said.