Best Affirms Brit Ratings

July 7, 2005

A.M. Best Co. announced that it has affirmed the financial strength rating of “A” (Excellent) and the issuer credit rating (ICR) of “a” of the U.K.’s Brit Insurance Limited (BIL). Best also affirmed the ICR of “bbb” of Brit Insurance Holdings PLC (BIH), BIL’s ultimate parent company, as well as its “bbb-” rating of the $15 million floating rate subordinated notes and the “bbb-” rating of the 45.2 million pound ($79.5 million) convertible unsecured loan stock issued by BIH. The outlook for all ratings remains stable.

“BIL’s risk-adjusted capitalisation is expected to remain strong at year-end 2005 and 2006, supporting projected increases in net premium income between 2004 and 2006,” said Best. In evaluating BIL’s probable capitalization, Best said it had taken account “of expected dividends (a minimum of 70 percent of profit after tax each year) to its parent.”

Best also indicated that it “believes additional financial flexibility is provided by BIH, which is listed on the London Stock Exchange. Growth in premium income is likely to emanate from the development of BIL’s distribution network in the U.K. regions. Future earnings are likely to be favourable, supported by strong underwriting performance and relatively low but stable investment returns.”

Best said it “expects a strong combined ratio of approximately 90 percent-95 percent in 2005 despite a likely increase in the operating expense ratio. This increase reflects the additional costs of developing its business in the U.K. regions and the related higher brokerage levels.”

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