View this article online: https://www.insurancejournal.com/news/international/2016/02/29/400152.htm
A.M. Best has revised the issuer credit rating (ICR) outlook to negative from stable and affirmed the financial strength rating of A (Excellent) and the ICR of “a+” of W. R. Berkley Insurance (Europe) Ltd. (WRBIEL). The outlook for the FSR remains stable.
The ratings reflect WRBIEL’s support from its ultimate parent, W. R. Berkley Corporation (WRBC), demonstrated by capital injections during 2014 and 2015 and an unlimited and unconditional guarantee from Berkley Insurance Co. (BIC), a subsidiary of WRBC.
In addition, BIC fully reinsures the company’s Berkley Re UK and Berkley Offshore Underwriting Managers’ coverholder business via a quota share program, A.M. Best said.
“The negative outlook on the ICR reflects WRBIEL’s diminishing business profile and reduced importance to WRBC as a means of accessing the UK and European insurance markets,” the ratings agency continued.
In particular, the transfer of business from WRBIEL to other entities within the group, due to take place during 2016, will lead to a significant reduction in the volume of business to be written.
WRBIEL maintains solid risk-adjusted capitalization, with recent post-tax losses offset by capital injections from WRBC, A.M. Best said, noting that it expects further financial support from the group to be forthcoming should risk-adjusted capitalization fall below a defined tolerance.
The company reported a technical loss of £40.2 million ($55.7 million) in 2014, compared to a technical loss of £4.7 million ($6.5 million) in 2013, which was driven by a combination of adverse prior year reserve development on U.K. professional indemnity and Spanish medical malpractice business, and large claims on marine hull and construction and engineering business, according to the ratings agency.
Although technical performance improved during the first nine months of 2015, a pre-tax loss is likely to be reported for the full year, A.M. Best said.
Source: A.M. Best