A.M. Best Co. has placed the A (Excellent) rating of Independent Insurance Co. Ltd. under review with developing implications. The rating action reflects the release of a trading statement on Feb. 8 in which the company revealed an expectation of an operating profit for the full year 2000 of approximately $13.8 million less than market expectations.
A number of factors contributed to the reduction, including a disappointing performance from the French operations, a further deterioration in the 1997 and prior year reserves for the London market general liability account and the increasingly litigious U.K. environment. A series of floods in the United Kingdom have also taken their toll. In France, the company has appointed a new management team, restructured its portfolio and altered its reserving approach, and, in the United Kingdom, the stop loss protection for the 1997 and prior years has been extended and the reserving approach has been adapted to reflect the changing legal environment.
A.M. Best recognizes the company has taken action to help mitigate the problems that have affected the 2000 results and has additionally benefited from improved market conditions in the most recent year. Independent should continue to benefit from further rate hardening in the U.K. market and business opportunities due to the repositioning of a number of competitors. However, given the need for increased reserves and after consideration of the expected continuation of business growth at the current rating levels, the rating will remain under review pending further detailed discussions with management and the release of the full year 2000 financial results.
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