A.M. Best Raises Rating of Brit Insurance to ‘A’ (Excellent)

A.M. Best Co. announced that it has raised the financial strength rating to A (Excellent) from A- (Excellent) of U.K.-based Brit Insurance Limited (BIL), and has removed the ratings from under review status with a stable outlook.

“These actions reflect improvement in BIL’s risk-based capitalisation, improved and excellent prospective financial performance and its rapidly expanding business position. Additional positive factors are BIL’s continued excellent liquidity and conservative investment strategy,” said Best.

“Offsetting factors include the inherent risks associated with developing substantial new books of business,” it noted.

The company increased its capitalization by £150 million ($245 million) from £70 million ($ 114.5 million) last year, which, “according to the A.M. Best risk-based capital model,—is expected to settle at a level at least consistent with the current rating as premium growth materialises in 2003.” Best added that the company’s liquidity is excellent and that “investments are largely held in cash and cash equivalents (65%) and highly rated fixed income securities (29%),” and that its “exposure to equities is minimal (below 6%).”

It noted that “market conditions are currently favourable in all lines of business planned for 2003.” It expects BIL to have a “post-tax profit for 2002 to be commensurate with the company’s rating level,” which represents “a significant improvement on the post-tax loss of GBP 9.4 million (USD 13.6 million) in 2001, resulting from exposure to the World Trade Center event.”

BIL has also been diversifying its business out of its two predominant lines -catastrophe excess of loss and financial risks – said Best. It noted that “Gross premiums written increased by 223% in 2002, mainly due to a GBP 75 million (USD 112.5 million) quota share of business ceded by Brit Syndicate 2987 at Lloyd’s.” The coverages now include “U.K. commercial and private motor (57%), U.S. motor (13%), marine hull and cargo (12%), bloodstock (12%) and U.S. motor cargo (4%).”

Best said that BIL’s plan to build “a well-diversified account “of approximately £300 million ($490 million) gross premium in 2003—”focusing on growth in U.K. mid-sized commercial lines and liability business–is feasible. Approximately one-third of the expanded book is expected to consist of new business, principally employers liability, public liability and commercial property insurance written in the U.K.”

Best concluded that “The company is expected to remain committed to maintaining an excellent level of capitalisation as measured on a risk-based adjusted basis despite ambitious growth plans.”

Topics AM Best Uk