LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Motors Insurance Company Limited (MICL) (United Kingdom). The outlook of these Credit Ratings (ratings) is stable. MICL is a wholly owned subsidiary of AmTrust International Insurance, Ltd., which is a member of the AmTrust Group.
The ratings reflect MICL’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
MICL’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), which is supported by prudent reserving practices and a low-risk, liquid investment portfolio. Prospectively, AM Best expects MICL’s risk-adjusted capitalisation to remain at the strongest level, benefitting from strong internal capital generation and a prudent capital management policy. The company’s moderate dependence on reinsurance and concentration to one reinsurance counterparty is partially mitigated by that counterparty’s excellent credit quality.
MICL has a track record of strong operating performance, with a five-year (2018-2022) weighted average return-on-equity ratio of 9.5%. The company’s earnings are underpinned by solid and stable underwriting results, demonstrated by a combined ratio that has ranged between 88.5% and 94.0% over the past five years, driven by prudent pricing and profit-sharing arrangements. In addition, the company’s overall earnings are supported by modest investment returns.
MICL provides auto warranty and auto add-on policies, primarily distributed by retail intermediaries. The company has a well-established competitive position in the auto warranty market in the United Kingdom, which generates almost all of its revenue. AM Best expects the company’s book of business to remain stable.
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