SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Guild Insurance Limited (GIL) (Australia). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect GIL’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
GIL’s balance sheet strength is underpinned by its risk-adjusted capitalization, which AM Best expects to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best also views GIL as having a conservative investment strategy and a prudent reserving approach. While the company’s underwriting portfolio includes exposure to some medium-to-long tail liability products, the company maintains a buffer in held reserves notably above the regulatory imposed minimum, and has a track record of adequate reserving. Other balance sheet factors include the company’s modest absolute capital base and its limited financial flexibility given its ultimate ownership by a not-for-profit organization.
AM Best views GIL’s operating performance as adequate, as evidenced by a five-year average return on equity ratio of 6% (fiscal years 2014 to 2018). GIL’s combined ratio historically has been maintained at approximately 100%, reflecting a favorable loss ratio albeit offset by an elevated expense ratio when compared with the industry average. Overall earnings in the past five years remain supported by robust and generally stable investment returns.
GIL’s business profile is viewed as neutral. While the company is a small insurer in Australia’s non-life sector, with a market share of gross premiums below 1% in 2018, GIL is a leading provider of insurance protection to allied health professional associations. The company’s presence in this segment is supported by its direct access to members of its parent; The Pharmacy Guild of Australia, a national employers’ organization representing community pharmacies across Australia.
The company’s ERM is viewed as appropriate given the size and complexity of GIL’s operations.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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