S&P Revises Outlook on British Marine to Positive; Affirms ‘A-‘ Rating

Standard & Poor’s Ratings Services announced that it has revised its outlook on Luxembourg-based insurer British Marine Luxembourg S.A. (BM) to positive from stable. S&P also affirmed its ‘A-‘ long-term counterparty credit and insurer financial strength ratings on the company.

“The outlook revision reflects continued improvements in operating performance, demonstrating the strong underwriting discipline that has been a feature of BM in recent years,” stated S&P credit analyst Lucy Stupples. “Such improvements have led to further significant strengthening of the capital base.”

S&P said: “The ratings reflect BM’s very strong capitalization, strong and improved operating performance, and strong competitive position, supported by a conservative investment strategy. Offsetting these strengths is the company’s sole dependence on marine business, which attracts a higher level of industry risk relative to other insurance classes.

“The positive outlook reflects BM’s strong position in the marketplace for small ships’ hull and machinery (H&M) and protection and indemnity (P&I) business. An upgrade would be dependent upon BM’s ability to continue to outperform the market. Improvements in operating performance will stabilize over the course of the next two to three years as the company enters a phase of reduced rate increases.

“The combined ratio is expected to remain below 90 percent for the years to Feb. 20, 2006 and 2007. The capital adequacy ratio is expected to rise to approximately 300 percent of Standard & Poor’s risk-adjusted requirements in 2006 and 2007 as profit levels will likely remain high and there is no requirement for BM to pay a dividend to its parent. BM will continue to defend and grow its position within its niche market without compromising its strict loss ratio targets for new business acquired. It will continue to provide fixed-premium nonslip P&I and H&M insurance to vessels of less than 10,000 gross tons.”