AM Best has affirmed its ratings for faith, heritage and education insurer Ansvar and says intragroup reinsurance arrangements limit exposure to legacy abuse claims.

The company has a financial strength rating of A- (Excellent) and a long-term issuer credit rating of a-. The outlook is stable.

“The ratings reflect Ansvar’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management,” the ratings agency says.

“In addition, Ansvar’s ratings factor in rating enhancement to reflect its ownership, integration and support from Ecclesiastical Insurance Office.”

AM Best views Ansvar as having prudent capital management, with a track record of financial flexibility to support its regulatory solvency position and risk-adjusted capitalisation.

“The company has significant exposure to physical and sexual abuse claims, predominantly arising from legacy exposures,” the ratings agency says.

“Notwithstanding this, any adverse reserve development in this area is expected to be limited by its intragroup reinsurance arrangements, provided by Ecclesiastical Insurance Office.”

Other balance sheet strength considerations include a low-risk investment portfolio and high reinsurance dependence to support the underwriting of large-limit property risks and long-tail liability exposures.

Ansvar has an established presence, strong expertise and brand recognition in its niche markets. These advantages are partially offset by limited control over distribution, due to its reliance on non-affiliated intermediary channels, AM Best says.