S&P Raises Rating on Sweden’s Moderna Sak to ‘BBBpi’

Standard & Poor’s Ratings Services announced that it has raised its public information-based (‘pi’) counterparty credit and insurer financial strength ratings on Swedish insurer Moderna Försäkringar Sak AB (Moderna Sak) to ‘BBBpi’ from ‘BBpi’.

“The upgrade reflects Moderna Sak’s improved capitalization,” stated S&P credit analyst Thorbjørn Børs. “The ratings also factor in the company’s good earnings, adequate reserving, and good liquidity,” said S&P.

As “offsetting factors, S&P cited a “more aggressive investment profile and a significant reliance on reinsurance.”

The rating agency also cautioned that the “ratings are based only on published financial information and additional information in the public domain. Moderna Sak commenced operations on Nov. 1, 2003. It is a sister company of Moderna Försäkringar AB (Moderna; not rated), and is owned by the Swedish financial group Invik & Co. AB (not rated).

S&P described Moderna as “an established niche insurer serving domestic private customers and small companies, with four business segments: commercial, private, yacht, and motor business.” It noted that “going forward, new business will be written in Moderna Sak, with the run-off of short-tail commercial and private lines to be left with Moderna. The motor book run-off risks also currently remain in Moderna, but may be transferred to Moderna Sak during 2005 pending regulatory approval.

“In addition, discontinued business lines, including potentially volatile inward reinsurance business, will be run off in Moderna, which is beneficial for the financial strength of Moderna Sak.”

Concerning the “pi” designation, S&P explained that it “may be based solely on publicly available information and may or may not involve the participation of the issuer’s management.” S&P added that it “has used information from sources believed to be reliable, but does not guarantee the accuracy, adequacy, or completeness of any information used.”