A.M. Best Co. has affirmed the financial strength rating of “A-” (Excellent) and the issuer credit rating of “a-” of Ireland’s New Technology Insurance (NTI), an insurance subsidiary of the UK-based Carphone Warehouse Group plc (CPW). The outlook for both ratings is negative.
“The ratings reflect NTI’s declining business profile,” said Best, who also indicated that it “is expecting a further reduction in net premium income over the next two years. This has placed increased pressure on the company’s efforts to grow third party business, which has been difficult to develop due to lack of profitable opportunities.”
Best also said that in its opinion, “it is vital that NTI implements successful strategies to attract projects emanating from outside CPW, as the company becomes less reliant on the declining group business.
“NTI’s risk-adjusted capitalization remains strong, though this has been attributed to the business decline and reduction in investment risk. The company’s risk-adjusted capitalization is expected to remain strong over the next two years.”
Best acknowledged that it expects NTI’s operating performance “to be good over the next two years, with a slight deterioration in 2006-2007.” Best projects NTI’s pre-tax profits to fall by approximately 20 percent over the same period compared to £32 million ($56 million) in 2005-2006. The combined ratio is expected to remain within the range of 55 percent-60 percent, and the loss ratio of 24 percent is likely to remain stable as the company develops its new claims control system.
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