LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of London General Insurance Company Limited (LGI) and London General Life Company Limited (LGL) (both domiciled in the United Kingdom). The outlook for all ratings remains stable.
The ratings of LGI reflect its track record of strong underwriting performance, good risk-adjusted capitalisation and established business profile within its core markets. LGL’s ratings reflect its strong risk-adjusted capitalisation and strategic importance to LGI.
LGI’s track record of strong performance is evidenced by the pre-tax profits reported in each of the past five years. Technical profits have been achieved despite the challenging economic conditions in Europe that have driven down consumer spending and demand for warranty and creditor products.
LGI’s risk-adjusted capitalisation remains at a good level. Going forward, capitalisation is expected to remain supportive of the ratings, with higher retained earnings partially offsetting an anticipated increase in underwriting risk. Premium income is expected to grow as economic conditions improve across the company’s core markets.
Together, LGI and LGL have an established specialist profile across Europe. The companies share a client base and their combined underwriting portfolio includes extended warranty, accidental damage and creditor insurance. LGL is strategically important to LGI as it enables long-term creditor life and permanent health insurance to be underwritten. A partially offsetting factor for the ratings is LGI’s highly concentrated customer base, with its five largest clients accounting for approximately 45% of net written premiums. However, this concentration risk is partly mitigated by the company’s long-standing client relationships and its comprehensive service and claims handling expertise, which cannot be easily substituted.
Positive rating actions on LGI and LGL are unlikely in the short to medium term. Negative rating actions may be driven by a significant decline in risk-adjusted capitalisation or unexpected poor operating performance. LGL’s ratings may also be subject to negative rating pressure if the company’s strategic importance to LGI diminishes.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.
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