A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit rating of “a+” of the UK-based Travelers Insurance Company Limited (TICL), both with stable outlooks.
“TICL is expected to maintain excellent stand-alone risk-adjusted capitalization in 2011, supported by full retention of earnings from 2010,” said Best. “The ratings also continue to factor in the explicit parental support, which is in the form of a guarantee provided by St. Paul Fire and Marine Insurance Company (SPFM), a subsidiary of its ultimate parent, The Travelers Companies, Inc., for all TICL liabilities. In addition, TICL benefits from reinsurance support from SPFM.”
However, Best also explained that “market conditions continue to be challenging in TICL’s core lines of business, and the company reported a modest technical loss for the first nine months of 2011, despite small rate increases for certain lines of business and positive prior year reserve development. In 2010, TICL reported a technical loss of £6 million [$9.6 million], an improvement on the loss of £31 million [$50 million] in the previous year, reflecting principally the significant reserve strengthening required in 2009 for a portfolio of discontinued Irish professional indemnity business.”
Best also pointed out that the “underwriting loss was offset by investment earnings, and the company produced a pre-tax profit of £42.7 million [$68.3 million] (2009: £33.4 million [$53.4 million]).
“TICL has a conservative investment portfolio, which comprises only high quality bonds and cash,” Best continued. “In the first nine months of 2011, a solid net investment yield was attained, albeit lower than the 4 percent achieved in 2010 (excluding realized and unrealized gains/losses).
The report also described TICL as having a “good business profile in its core UK market as a specialist underwriter of liability and commercial property business. The company’s profile also benefits from the strong brand name recognition of Travelers. TICL is Travelers’ main underwriting operation in the United Kingdom and Ireland.”
Source: A.M. Best
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