S&P Ratings Reports on Sunderland Marine, Gjensidige NOR

July 6, 2001

International rating agency Standard & Poor’s announced that it had lowered its counterparty credit and insurer financial strength rating on Sunderland Marine Mutual Insurance Co. Ltd (SMMI) to triple-‘B’ from triple-‘B’ plus. It also affirmed the ‘A’ rating of mutual insurer Gjensidige NOR Forsikring, Norway’s second largest non-life insurer.

SMMI’s downgrade was “based on the company’s continued poor operating performance, a weaker investment result through exposure to equities, and the consequent decline in the company’s capital strength,” S&P said.

It pointed out that “SMMI continues to maintain its strong niche position in its core markets of Marine Hull and Machinery insurance for owner-operated fishing vessels, harbor and service craft, and aquaculture,” where it’s the market leader. It has a a strong customer base “with client retention rates remaining close to 100 % throughout the current difficult market conditions.”

S&P sited Gjensidige’s strong business position, with a 30 percent market share in Norwegian non-life sales, mainly in rural areas. Its main difficulty is the relatively small market, 4.5 million, it serves.

Norway is a wealthy and stable country, however, and net premiums written increased by 22 percent last year to close to $1 billion. S&P indicated that the company’s target of achieving a combined ratio of 105 percent this year appeared to be in reach.

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