A.M. Best Co. announced that it has upgraded the financial strength rating to “A-” (Excellent) from “B++” (Very Good) of Through Transport Mutual Insurance Association Limited (TT Bermuda) and its wholly owned U.K. subsidiary, Through Transport Mutual Insurance Association (EurAsia) Limited. The two companies collectively trade as TT Club. At the same time, Best upgraded the issuer credit ratings to “a-” from “bbb+” for both companies. The outlook for all ratings is stable.
“The upgrade of the ratings reflects TT Club’s consistent strong underwriting performance in recent years, leading to an improvement in risk-adjusted capitalization that A.M. Best believes is sustainable,” said the bulletin. “Additionally, the quality of capital is likely to improve as TT Club’s dependence upon reinsurance falls.”
“The company’s overall net premium retention is likely to increase to 74 percent in 2006, up from 67 percent in 2005. The ratings of TT EurAsia continue to reflect A.M. Best’s view that the company is an integral part of TT Club’s worldwide strategy.” Best said it “anticipates that TT Club’s excellent recent performance will continue in 2006 and 2007, although underwriting profitability is likely to decline due to rate decreases that the company is expected to offer to certain TT Club members. The rate reductions, combined with higher catastrophe reinsurance costs, are likely to drive an increase in TT Club’s combined ratio to approximately 95 percent in 2006, up from 74 percent in 2005.”
“TT Club’s sustained excellent performance is likely to be supported by its efforts to improve its business portfolio and underwriting controls. In 2005, TT Club’s gross loss from the U.S. hurricanes was $60 million, but this reduced to a modest $2.5 million net of reinsurance. The company continues to benefit from comprehensive catastrophe reinsurance protection.”
Best also indicated that it “believes that TT Club also benefits from a strong profile focused on the provision of insurance and risk management products for the international transport and logistics industry. Gross premiums in 2006 are likely to be approximately $ 212 million, a moderate increase of 4 percent over the previous year.”
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