A.M. Best has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of “a-” to Société Hospitalière d’Assurances Mutuelles (Sham) (France). The outlook assigned to both ratings is stable.
The assigned ratings reflect Sham’s specialist business profile in France, good operating performance and solid risk-adjusted capitalisation. The ratings also factor in Sham’s robust risk management framework and supportive reinsurance panel. Partially offsetting rating factors include Sham’s concentration in the French medical professional liability insurance (MPLI) market and volatile underwriting performance.
Sham, incorporated in 1927, is a mutual insurance company and the ultimate parent of Groupe Sham, which specialises in providing insurance solutions to the medical profession. Sham has an excellent business profile in its niche market, being a leader in the MPLI segment in France. The company leverages its strong brand recognition and benefits from a market share of approximately 50%. In light of this, Sham’s insurance portfolio is concentrated, with MPLI accounting for approximately 70% of gross written premium and 95% of gross technical provisions in 2014. Sham mitigates this concentration risk through disciplined underwriting, pricing and claims handling practices. Additionally, Sham has engaged in a project to gently diversify its operations and reduce the relative share of MPLI in its portfolio, most notably through the acquisition of the French broker Sofaxis in 2013. More recently, Sham started a measured international expansion within Europe, launching in Spain in 2014 and Italy in 2015.
Sham has experienced a good track record of operating profitability, demonstrated by a three-year average operating ratio of 79% (2012-2014), that translated into a net result of EUR 16.7 million in 2014. The group produced a return on equity of 7% in 2014, despite a technical loss, with a combined ratio of 102%, in large part driven by management’s prudent reserving philosophy.
Sham’s solid level of risk-adjusted capitalisation is supported by a conservative investment portfolio, focused on investment-grade fixed income securities, providing consistent income to supplement the core insurance business. A.M. Best expects Sham’s risk-adjusted capitalisation to remain at a solid level on the back of continued strong operating profitability, whilst technical performance is expected to continue to experience a certain level of volatility as a result of management’s conservative approach to reserving.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.
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