AM Best affirms ratings of Swedish insurer Solid

The outlook for both ratings remains stable.

AM best said Solid continues to maintain good risk-adjusted capitalisation supported by its stable operating performance and the discontinuation of an inter-company loan in 2010.

An offsetting rating factor continues to be Solid's reliance on other inter-company transactions, particularly the level of reinsurance ceded to an unrated affiliated company based in Switzerland and cash investments with Resurs Bank AB, an affiliated financial institution. However, the level of reliance on inter-company transactions is expected to reduce significantly in 2011.

AM Best anticipates that Solid's stable operating performance will be maintained in 2011, with the low loss ratios that characterise the company's account likely to continue. An increase in Solid's expense ratio is expected in 2010 due to its diversification into roadside assistance, but the impact on the reported year-end combined ratio is likely to be only a marginal increase from 90% in 2009.

Solid has established a strong niche position for extended warranty business in the Swedish market. Gross written premiums are likely to increase marginally in 2010, from SEK1bn ($149m) in 2009 due to expansion into other specialty lines of business, particularly the roadside assistance account.