LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a” of Ecclesiastical Insurance Office plc (EIO) (United Kingdom). At the same time, A.M. Best has affirmed the issue rating of “bbb” on GBP 106,450,000, 8.625% non-cumulative irredeemable preference shares issued by EIO. The outlook for all ratings remains stable.
The ratings of EIO reflect its excellent risk-adjusted capitalisation and its established specialist business profile within the not-for-profit sector of the U.K. market. The ratings also consider the improvement in technical performance achieved in 2014 and 2015.
EIO reported underwriting profits in both 2014 and 2015, following four years of underwriting losses. The improvement in technical performance followed management actions, which included exiting or reducing exposure to non-performing lines. A.M. Best expects the positive technical performance to be sustained, reducing the company’s dependence on investment income to produce overall operating profits.
Risk-adjusted capitalisation is expected to remain strong, supported by continuation of good, albeit volatile, retention of earnings and comprehensive reinsurance protection. The company’s relatively high exposure to equities (year-end 2015: 26%) remains a source of potential volatility for both risk-adjusted capitalisation and earnings.
The company has a specialist business profile in the not-for-profit segment of the market, writing a portfolio of mainly U.K. commercial property and liability risks. Overall premium income has declined in recent years, as the company has exited non-core lines of business. However, the company maintains a good competitive position in its niche markets, where it benefits from its long-lasting relationships with clients and specialist expertise in insuring churches, heritage buildings and independent schools.
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 see A.M. Best’s Recent Rating Activity web page.
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