This week ICMIF Supporting Member A.M. Best assigned a Financial Strength Rating of A (Excellent) and a Long-Term Issuer Credit Rating of “a” to ICMIF’s French member Mutuelle Générale de l’Education Nationale (MGEN). The outlook assigned by A.M. Best to these Credit Ratings (ratings) is stable. This is the first time a health mutual in France has been rated.
A.M. Best says that the ratings reflect MGEN’s solid business profile in France, modest operating performance and excellent risk-adjusted capitalisation. According to the rating agency a partially offsetting rating factor is MGEN’s significant concentration in health insurance business in France.
MGEN was formed in 1946 when over a hundred local healthcare savings and friendly societies came together, just at the time when the post-war French universal national health service was being devised. As its name suggests MGEN’s roots were in the education system, helping teachers ensure they had the health care they needed on the basis of a system of mutual self-help and solidarity. The mutual currently provides cover to around 4 million people.
The mutual has been led by Jean-Louis Davet (pictured) since 2008 and it was his decision to engage with A.M. Best in the rating process. Davet is a member of the ICMIF Board of Directors and has also represented the mutual insurance sector by serving on the High Level Steering Committee of the Insurance Development Forum (IDF). After lobbying by ICMIF the IDF took the decision to create a new Working Group focused on health insurance and the Chair will be Davet.
With gross written premium of EUR 2.1 billion, MGEN has a solid business profile as a leading health insurer in France says A.M. Best. Its profile is supported by strong brand recognition, broad distribution reach and solid ties with its affinity groups, which, according to the agency, 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.
Due to the fact that domestic supplementary health insurance accounts for over 90% of MGEN’s total business, A.M. Best believes that the mutual is directly exposed to potential adverse developments in France’s social protection market. Whilst A.M. Best believes that 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 including the expansion of its geographic footprint and developing new value-added products and services with the help of strategic partners.
A.M. Best notes that, like most mutual insurers, MGEN has a track record of pricing the business for the benefit of its member policyholders. As a result, the agency says, 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). However, A.M. Best expects to see an improvement in underwriting results going forward, after MGEN introduced a more profitable product range in 2016.
A.M. Best says that 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. The agency expects to see the mutual’s prospective risk-adjusted capitalisation remain at an excellent level, supported by modest growth and full retention of earnings.