A.M. Best Affirms Credit Ratings of Mutuelle Gnrale de lEducation Nationale

A.M. Best has affirmed the Financial Strength Rating of A
(Excellent) and the Long-Term Issuer Credit Rating of “a” of Mutuelle
Générale de l’Education Nationale (MGEN) (France). The outlook of
these Credit Ratings (ratings) is stable.

The ratings reflect MGEN’s balance sheet strength, which A.M. Best
categorises as strongest, as well as the company’s adequate operating
performance, neutral business profile and appropriate enterprise risk

MGEN’s balance sheet strength is underpinned by its risk-adjusted
capitalisation, which is maintained at the strongest level, as measured
by Best’s Capital Adequacy Ratio (BCAR), with low underwriting leverage
and a conservative investment profile that is primarily invested in good
quality fixed income securities. A.M. Best expects prospective
risk-adjusted capitalisation to be supported by modest business growth
and full retention of earnings. As a mutual company, MGEN’s financial
flexibility is considered limited, which is an offsetting factor to the
balance sheet strength assessment.

In line with the mutual’s risk appetite, MGEN aims to price its business
for the benefit of its members. As a result, the mutual produces
adequate operating performance, with profit before tax (and before
exceptional income and expenses) ranging between EUR -19 million and EUR
47 million over the past five years (2013-2017), largely driven by
investment income. In order to adapt to changing market conditions for
health care insurers in France, such as increasing medical costs or
lower deductibles on certain products, MGEN continues to enhance its
underwriting approach, which should translate into improved technical
profitability over the medium term.

MGEN’s neutral business profile assessment takes into account the
company’s leading market position in the French health insurance
segment, targeting the niche clientele of teachers and other civil
servants. MGEN’s profile benefits from strong brand recognition, broad
distribution reach and solid ties with its affinity groups, which
together contribute to high levels of member retention. However, with
approximately 90% of its total business stemming from domestic
supplementary health covers, MGEN is directly exposed to potential
adverse developments in France’s social protection landscape. Whilst the
business mix is not forecast to change significantly over the medium
term, the mutual has engaged in a number of initiatives over recent
years in an effort to reduce its significant concentration, including
expanding its geographic footprint and developing new value-added
products and services with the help of strategic partners.

A.M. Best notes that the recent merger between Groupe Istya, a mutual
group of which MGEN was the primary member, and UMG Harmonie
Mutuelle, leading to the creation of Groupe VYV, the largest mutual
social protection group in France, is expected to further strengthen
MGEN’s business position.

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

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


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