A.M. Best Assigns Credit Ratings to Mutuelle Générale de l’Education Nationale. The outlook assigned to these Credit Ratings (ratings) is stable.
Created in 1946, MGEN is a French mutual insurance company that specialises in providing supplementary health cover to teachers and civil servants employed in the fields of education, culture and research, as well as youth and sports. With gross written premium of EUR 2.1 billion, MGEN has a solid business profile as a leading health insurer in France. Its profile is supported by strong brand recognition, broad distribution reach and solid ties with its affinity groups, which together contribute to high levels of member retention. A.M. Best notes that the anticipated merger between Groupe Istya, a mutual group of which MGEN is the primary member, and UMG Harmonie Mutuelle is expected to further strengthen MGEN’s business position.
With domestic supplementary health insurance accounting for over 90% of its total business, MGEN is directly exposed to potential adverse developments in France’s social protection market. 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. These efforts have included expanding its geographic footprint and developing new value-added products and services with the help of strategic partners.
As a mutual insurer, MGEN has a track record of pricing the business for the benefit of its policyholders. As a result, operating performance has been modest, with profit before tax ranging between EUR 20 million and EUR 55 million over the past five years (2012-2016). Results are largely driven by investment income, and technical performance has been relatively weak, as evidenced by a five-year average combined ratio of 101.1% over that period. Underwriting results are however expected to improve marginally going forward, following the introduction of a more profitable product range in 2016.
MGEN benefits from an excellent risk-adjusted capitalisation, supported by low underwriting leverage and a diversified investment portfolio that is primarily invested in investment-grade fixed income securities. A.M. Best expects the mutual’s prospective risk-adjusted capitalisation to remain at an excellent level, supported by modest growth and full retention of earnings.
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