Best Affirms ‘A’ Rating of Catlin Insurance Co.

A.M. Best Co. announced that it has affirmed the financial strength rating of A (Excellent) of Catlin Insurance Company Limited (CICL), Bermuda with a “stable” outlook.

“The rating reflects the company’s excellent capitalisation and prospective financial performance, access to business with a proven track record through Lloyd’s Syndicate 2003–currently rated A (Excellent)–and its development of a diversified account from other business sources,” said Best. “An offsetting factor is the challenge to CICL from increased business volume. The company is a wholly owned subsidiary of Catlin Group Ltd. (CGL), a Bermudian holding company. CGL is the ultimate owner of Catlin Underwriting Agencies Limited (CUAL), Lloyd’s managing agency of syndicate 2003.”

Best noted that “CICL maintains excellent risk-adjusted capitalisation. At year-end 2002, total shareholders’ equity was USD 456 million, including USD 406 million in new funding from CGL’s July 2002 private equity offer.” The rating agency said it “believes that CICL’s prospective risk-based capitalisation is sufficient to support its existing plans for growth. This includes both growth in Bermuda as well as initiatives currently under consideration to open branches of CICL in other locations.”

It’s also expecting an “excellent prospective performance” from CICL this year and next. “The company’s combined ratio in 2002 was excellent at 65% and met A.M. Best’s expectation that CICL’s links to CUAL would mitigate the risks normally associated with start up companies because it provided an established source of profitable business,” said the bulletin. “This covers the company’s first six months of trading from July 2002 when the account written entirely comprised quota share reinsurance of the CUAL syndicates. In 2003, reinsurances of CUAL managed syndicates are expected to account for approximately 78% of estimated gross written premium.”

Best also noted that “CICL plans to nearly treble gross premium income in 2003 and then increase by a further 100% in 2004 to approximately USD 525 million. A.M. Best believes that these targets are achievable but will nevertheless stretch CGL’s management resources at the same time as substantial growth is expected at syndicate 2003.”