View this article online: https://www.insurancejournal.com/news/international/2005/01/18/49757.htm
Standard & Poor’s Ratings Services announced that it has affirmed its ‘A’ long-term counterparty credit and insurer financial strength ratings on Assuranceforeningen Gard – gjensidig – (Gard P&I), the Norway-based protection and indemnity (P&I) marine mutual club.
S&P also said it has affirmed its ‘A-‘ long-term counterparty credit and insurer financial strength ratings on Gard P&I’s Bermuda-based subsidiary, Gard Marine & Energy Ltd. (Gard M&E). The outlook on both entities is stable.
“The ratings on Gard P&I and Gard M&E reflect the group’s very strong management and administration, as well as its strong and highly specialized competitive positions in the Nordic and international P&I insurance markets,” S&P said. “The Gard group now also enjoys a leading position in international marine and energy (M&E) through its 57.9 percent controlling stake in Gard M&E.
“In addition, the ratings reflect the group’s very strong capitalization and reserving, and the significant benefits of Gard P&I’s marine mutual structure. The ratings on Gard M&E also benefit from the club’s strategic importance to Gard P&I.”
S&P noted, however, that “partially offsetting these strengths, operating performance can be volatile, both in the P&I and the M&E sectors. Gard M&E also has the disadvantage of lacking a stable track record of ownership and earnings.”
S&P credit analyst Peter McClean observed that the stable outlook on the Gard group reflects the rating agency’s “expectation that assimilation of Gard M&E will be completed satisfactorily during 2005, strengthening the competitive position of the Gard group by cross-selling to Gard P&I members.”
S&P also said it expects the group’s operating performance “to show considerable improvement, with the combined ratio for the P&I business reaching an optimum level for the cycle of about 95 percent in 2005, and remaining within tolerances for a mutual at just over 100 percent in 2006. On a consolidated basis, a combined ratio of about 100 percent is expected in both years.”
“Risk-based capitalization across both the P&I and M&E operations is expected to be maintained at very strong levels,” McClean concluded.