A.M. Best Affirms Credit Ratings of Enel Insurance N.V.

A.M. Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-” of Enel
Insurance N.V. (EINV) (Netherlands), a captive of Enel S.p.A.
(Enel), a multinational electric utility company based in Italy. The
outlook of these Credit Ratings (ratings) remains stable.

The ratings reflect EINV’s balance sheet strength, which A.M. Best
categorises as very strong, as well as its adequate operating
performance, neutral business profile and appropriate enterprise risk
management (ERM).

EINV’s balance sheet strength assessment is underpinned by the strongest
level of risk-adjusted capitalisation, as measured by Best’s Capital
Adequacy Ratio (BCAR). The captive maintains good liquidity, with
investments composed almost entirely of fixed-income securities and cash
funds. An offsetting rating factor is EINV’s high reliance on
reinsurance, although the risks associated with this dependence are
partially mitigated by the captive’s use of reinsurers of excellent
credit quality. In 2017, the captive generated an underwriting loss of
approximately EUR 10 million, primarily driven by reserve strengthening
on its property book. However, EINV’s underwriting performance over the
past five years (2013-2017) compares positively with its targeted
through-the-cycle combined ratio, and A.M. Best expects the captive to
achieve near break-even underwriting results and a low-single digit
return on equity in future years.

As a single-parent captive, EINV is well-integrated within the Enel
group and plays a fundamental role in managing the group’s risk
exposures. The captive’s risk management capabilities are in line with
its risk profile.

A.M. Best remains the leading rating agency of alternative risk
transfer entities, with more than 200 such vehicles rated in the United
States and throughout the world. For current Best’s Credit Ratings and
independent data on the captive and alternative risk transfer insurance
market, please visit www.ambest.com/captive.

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 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 A.M. Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and A.M. Best Rating
Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its

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