Ratings Roundup: Glacier AG, Ansvar, Adamjee

July 7, 2010

A.M. Best Co. has removed from under review with negative implications and affirmed the financial strength rating of ‘A-‘ (Excellent) and issuer credit ratings of “a-” of Liechtenstein-based Glacier Insurance AG, following the successful completion of its acquisition by Torus Insurance (Bermuda) Limited, a subsidiary of Torus Insurance Holdings Limited [See IJ web site – https://www.insurancejournal.com/news/international/2010/07/01/111218.htm]. When regulatory approvals are received Glacier Insurance will be renamed Torus Insurance (Europe) AG. All ratings have been assigned a stable outlook. Best noted that Glacier Insurance’s “stand alone risk-adjusted capitalization is expected to remain supportive of its rating level in 2010. Additionally, the company benefits from the explicit support of Torus Bermuda, through the provision of a 95 percent quota share reinsurance agreement.” Best also indicated that Glacier Insurance “enhances the diversification of Torus’ portfolio through the addition of an established book of European specialty and property business. The company’s network of European regional offices provides the group with access to business that is normally unavailable through London and Bermudian markets, as well as a platform for the distribution of Torus’
existing products. Business will be supported by the retention of Glacier Insurance’s underwriting teams, which have established good relationships in their respective markets.”

A.M. Best Co. has placed under review with positive implications the financial strength rating of ‘A-‘ (Excellent) and issuer credit rating of “a-” of UK-based Ansvar Insurance Company Limited, a wholly owned subsidiary of Ecclesiastical Insurance Office plc (EIO), the intermediate operating holding company of the Ecclesiastical group of companies. The rating actions follow “EIO’s announcement of its intention to change Ansvar’s legal structure, subject to regulatory and court approval,” Best explained. As of January 1, 2011, Ansvar is “expected to operate as a division of EIO under its existing brand rather than as a separate subsidiary. The purpose of the reorganization is to allow the group to manage its capital more efficiently, to provide Ansvar with access to EIO’s main reinsurance program and to maximize operating efficiencies within the group.” Best added that it “anticipates resolving the under review status when the proposed change to the legal structure of the group receives regulatory and court approval.”

A.M. Best Co. has assigned a financial strength rating of ‘B++’ (Good) and an issuer credit rating of “bbb+” to Pakistan’s Adamjee Insurance Company Limited (AICL), both with stable outlooks. The ratings of AICL “reflect its strong risk-adjusted capitalization, robust underwriting performance, established business profile in the Pakistan insurance market and developing risk management framework,” said Best. “An offsetting factor is its concentration of invested assets in equities, particularly in affiliated companies.” Best added that in its opinion, AICL’s “level of risk-adjusted capitalization is strong, supported by good retained earnings and sufficient to absorb projected growth of up to 15 percent in each of the next two years. Moreover, AICL’s capital position benefits from very good reinsurance support, despite having to cede cessions of up to 35 percent of treaty business to Pakistan Reinsurance Company Limited, the national reinsurer.” Best added that it believes AICL has a “strong management team, adopting prudent strategies to serve the requirements of the local market and establishing a leading market position in Pakistan, with a 29 percent share of gross premiums written. AICL has a well diversified non-life portfolio, with gross premiums in excess of PKR 10.3 billion ($125 million) in 2009, supported by good retention levels above 65 percent.” In Best’s view, AICL has “experienced robust underwriting results across all lines of business, with technical profits of approximately PKR 679 million ($8.1 million) in 2009 and a combined ratio below 90 percent. Investment performance tends to be volatile, dictated by market movements in equities, and benefitting from significant realized gains in the past three years.” However best also indicated that it has concerns regarding AICL’s “concentration in quoted equities, particularly in affiliated companies, which account for approximately 45 percent of invested assets. This can give rise to volatility in both AICL’s risk-adjusted capitalization and operating performance, which would need to be managed.”

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