Best Upgrades W.R. Berkley Insurance (Europe) ICR Rating; Affirms ‘A’ FSR

December 17, 2012

A.M. Best Europe – Rating Services Ltd. has upgraded the issuer credit rating (ICR) to “a+” from “a” and affirmed the financial strength rating of ‘A’ (Excellent) of UK-based W.R. Berkley Insurance (Europe), Limited, both with stable outlooks.

“The upgrade reflects the introduction of explicit parental support in the form of a guarantee provided by Berkley Insurance Company (BIC), a subsidiary of its ultimate parent, W.R. Berkley Corporation, for all WRB Europe’s liabilities,” Best explained. “The unlimited and unconditional guarantee was put in place on 13 September 2012.” The action also coincides with Best’s affirmation of BIC’s ratings.

WRB Europe’s stand-alone risk-adjusted capitalization is expected to “remain excellent into 2013, supported by full retention of earnings. Rating conditions remain competitive for WRB Europe’s core lines of business,” Best continued. “In spite of this, the company is expected to report an improved combined ratio in 2012 (2011: 100.8 percent), supported by a positive contribution from its newer branches and reduced claims activity during the year to date.”

The report also noted that “WRB Europe’s business profile continues to evolve, as it diversifies away from UK casualty insurance into various other lines of business in and outside the United Kingdom. In addition to operations in the United Kingdom, the company has four branches in Europe, as well as an Australian branch. WRB Europe continues to be strategically important to BIC as a means of access to the UK and European insurance markets.”

In conclusion Best said: “A positive change in the ratings of BIC could lead to positive rating actions on WRB Europe.

“Negative rating movements could occur if there were a material fall in risk-adjusted capitalization and/or a notable and continuous deterioration in the company’s underwriting performance. Additionally, any change in the company’s significance to its parent or in the explicit support provided by its parent could place downwards pressure on WRB Europe’s ratings.”

Source: A.M. Best Europe

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