A.M. Best Co. announced that it has affirmed the financial strength rating of “A-” (Excellent) and assigned an issuer credit rating of “a-” to U.K.-based Markel International Insurance Company Limited (MIICL) with a stable outlook for both ratings.
“The rating reflects MIICL’S adequate risk-adjusted capitalisation and implicit support from the parent company, Markel Corporation, said Best. “An offsetting factor is MIICL’s underwriting performance, which has been adversely affected by legacy issues.”
Best notes that a recent capital injection of $35 million and “commutations of existing liabilities in 2005” have restored MIICL’s risk-adjusted capitalization. Best also explained that the decline in 2004 was in part due to the combination of an “unprecedented hurricane season, a further increase of reserves with regard to legacy business and related charges for reinsurance bad debt.”
Best said it “expects MIICL’s underwriting performance to be impacted by the 2005 hurricanes, moderately softening rates in its main line of business (professional indemnity and property) and the potential for continued adverse legacy loss reserve development. However, overall the company is likely to remain profitable as good anticipated investment return is offsetting underwriting losses.”
Best also indicated that in its opinion, “MIICL’s ratings could become under pressure if 2006 underwriting results do not improve. In 2005, net written premiums are likely to decrease due to declines in premium rates, which are likely to be partially offset by selective expansion in the U.K. regional market and European countries such as Spain.”
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