LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term 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 of these Credit Ratings (ratings) remains stable.
The ratings of LGI reflect its track record of strong underwriting and operating performance, solid 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 strong operating performance is evidenced by the pre-tax profits reported in each of the past five years (2012-2016) and the average return on equity of 9.4% over the same period. Underwriting profits were achieved despite the challenging economic conditions in Europe that drove down consumer spending and demand for warranty and creditor products.
LGI’s balance sheet strength remains at a good level and benefits from the financial flexibility of LGI’s parent company, The Warranty Group Inc. Going forward, A.M. Best expects capitalisation to remain supportive of the ratings, with retained earnings partially offsetting an anticipated increase in underwriting risk. Balance sheet strength is enhanced by a conservative approach to investments.
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 remains 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 58% 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.
This press release relates to Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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