Market Overview

A.M. Best Affirms Credit Ratings of Electric Insurance Company and Its Subsidiary


A.M. Best has affirmed the Financial Strength Rating of A
(Excellent) and the Long-Term Issuer Credit Ratings of "a+" of Electric
Insurance Company
(Electric) (Beverly, MA) and its wholly owned
subsidiary, Electric Insurance Ireland Designated Activity Company
(EIIDAC) (Dublin, Ireland). The outlook of these Credit Ratings
(ratings) is stable.

The ratings reflect Electric's balance sheet strength, which A.M. Best
categorizes as strongest, as well as its adequate operating performance,
neutral business profile and appropriate enterprise risk management. The
ratings also take into consideration the value-added commercial
insurance services provided to General Electric Company (GE), as
well as Electric's strategic importance to GE.

The ratings of Electric are afforded to EIIDAC primarily due to its
affiliation with Electric and its integration into Electric's business
plan, as well as its supportive capitalization, profitable operating
performance and strategic role in providing commercial lines products to
GE in the European Union.

Partially offsetting these positive rating factors are the limitations
on its commercial lines business to one policyholder, GE. Most
commercial lines are rated retrospectively, however, contribute to
reduced risk and steady earnings. While retrospective rating features in
commercial policies limit the earnings potential of an insurance
company, this also protects a company from excessive loss by allowing it
to charge back losses through premium adjustments. In addition, although
decreasing, Electric has a significant gross exposure in its workers'
compensation line, which is materially diminished by reinsurance
protections, including the Terrorism Risk Insurance Program
Reauthorization Act (TRIPRA).

Future positive rating action could be taken if Electric's profitability
and capital appreciation continue to remain strong. However, the ratings
may come under negative pressure if there is a material weakening in
risk-adjusted capital or a reduction in Electric's strategic importance
to GE or its overall business profile.

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

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