A.M. Best Co. has affirmed the financial strength rating of “A-” (Excellent) of Sunderland Marine Mutual Insurance Company Limited (SMMI) and assigned an issuer credit rating of “a-“. The outlook for both ratings is stable.
Best’s said that in its opinion, “SMMI’s risk-adjusted capitalization remains excellent and sufficient to support the company’s future anticipated business volume. SMMI’s retained surplus in 2005 increased free reserves by £8.5 million ($16.2 million) to £43.8 million ($83.2 million).” Best also indicated that it “believes this growth will continue in 2006, bringing total free reserves to approximately £51 million ($96.9 million) at year-end.”
The rating agency “anticipates strong earnings from SMMI in 2006, although further ahead, softening in the marine market is likely to affect performance. SMMI is likely to produce a combined ratio near 90 percent and a post tax result of approximately £9 million ($17.1 million) for 2006 before charging goodwill and other associated costs relating to the acquisition of its management company. After charging these costs, the anticipated addition to free reserves from retained surplus is £7 million ($13.3 million), down from £9 million ($17.1 million) in 2005, resulting from a continuation of good claims experience and firm rates.”
In conclusion, Best said it “believes that SMMI maintains a strong business profile in its niche sectors, which comprise fishing vessels, inland/coastal vessels and aquaculture. The company writes business through its network of international branches, giving it a geographically well-diversified portfolio of business. SMMI further enhances its business profile through the use of its technical expertise and, in respect of aquaculture business, its in-house risk manager, Aquaculture Risk Management Company.”
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