Best Affirms PICL ‘B++’ Ratings

March 9, 2006

A.M. Best Co. announced that it has affirmed the financial strength rating of “B++” (Very Good) and assigned an issuer credit rating of “bbb” to Ireland’s Primary Insurance Company Limited (PICL) with a stable outlook.

“PICL’s risk-adjusted capitalization has been maintained at a level commensurate with the current rating, benefiting from a series of management actions including issuance of €10 million ($12 million) of subordinated debt in January 2006 and placement of a retroactive reinsurance contract on business written during 2005,” said Best. “These actions offset the pressures placed on PICL’s capitalization by the very strong net premium growth since the company’s inception (approximately 40 percent anticipated compound growth in the three years to 2005).” Best also indicated that it “expects PICL’s risk-adjusted capitalization to be further enhanced during 2006 due to an anticipated reduction of 25 percent in net premiums written.”

Best also expects an improvement in PICL’s combined ratio during 2006 “to approximately 100 percent (down from approximately 105 percent anticipated in 2005) due mainly to the company’s concentration on its accident and health portfolio.”

Best also indicated that it “anticipates a modest profit after tax of approximately €250,000 ($296,000) in 2005 factoring losses incurred from the January 2005 U.K. floods and a significant December 2005 property claim. ” However, Best said it “believes these losses are partially offset by PICL’s stable anticipated investment return of approximately 3.5 percent at year-end 2005, with a similar return expected in 2006.

A.M. Best believes that PICL benefits from a niche (albeit modest) business profile in the U.K. and Irish markets, reflecting the production of all its business through internal channels of its ultimate parent, Primary Group Limited, an insurance distribution specialist.”

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