BRIT Insurance Limited awarded A- rating by Standard & Poors

BRIT Insurance Limited awarded A- rating by Standard & Poors
December 29, 1999


BRIT Insurance Co. Ltd. Assigned 'A-' Ratings; Outlook Stable
Rob Jones, London (44) 171-826-3650; Christian Dinesen, London (44) 171-826-3554
LONDON (Standard & Poor's CreditWire) Dec. 29, 1999--Standard & Poor's today assigned its single-'A'-minus counterparty credit and financial strength ratings to BRIT Insurance Co. Ltd. (BRIT). This rating is based predominantly on the company's current and prospective capital adequacy and strong reinsurance program, underpinned by a long-term stop-loss contract with CNA Reinsurance Co. Ltd. (CNA Re; single-'A'-plus/Negative/--). The other positive factor is an able management team with strong credentials for conducting mortgage indemnity business. These factors are offset by BRIT's moderate business position and lack of earnings history, which reflects a virtual start-up company. The outlook is stable.

The company is a subsidiary of BRIT Insurance Holdings PLC (BRIT Holdings), having been acquired during 1999 from Benfield Greig (BG), a leading broker. The company is beginning to expand into mortgage indemnity business and other financial risks, from its base in the London reinsurance market, where it has written small amounts of mainly BG-sourced catastrophe reinsurance business since 1995.

Major rating factors:
-- The company has very strong capitalization, current and prospective, although relatively small in absolute terms at £60 million (US$97 million) at year-end 1998. This is underpinned by the three-year stop-loss reinsurance protection provided by CNA Re that limits its loss ratio to 120%. Above this level, BRIT will be able to recover up to £10 million each year. This contract will protect the capital base against unforeseen losses in the company's formative years.
-- BRIT's senior management team has strong credentials for conducting mortgage indemnity business. Although the key individuals have not worked together as a team before joining BRIT, their experience stands the company in good stead. Standard & Poor's believes that the company, with its major focus on financial risks, is well placed to satisfy the needs of mortgage lenders in the U.K.
-- Moderate current business position in catastrophe reinsurance. The company benefits from access to a very substantial pool of business placed by BG in the London market, with scope to grow the business substantially. However, even by the end of 2002, the company is expecting to write gross catastrophe premiums of only £38 million, based on current market conditions.
-- The company has had strong profitability since inception, with an average combined ratio of 90%, although this has been achieved in years of relatively benign claims. The results for 1998 and 1999 have deteriorated in line with increased claim frequency.
-- Very disciplined approach to writing catastrophe business, with conservative bases for calculating probable maximum loss (PML) expected to remain in place until at least the end of 2001. This discipline is backed by good corporate governance oversight and close supervision from the Financial Services Authority (FSA).
-- Good financial flexibility as a subsidiary of BRIT Holdings, a publicly quoted moderately leveraged holding company. BRIT Holdings gives BRIT an operating platform in the insurance company market in addition to its interests in Lloyd's of London.
OUTLOOK: STABLE.
-- Modest growth in financial risks business, with gross premiums of £10 million in 2000 rising to £25 million by 2002.
-- Modest growth in catastrophe business in current business conditions. Gross premiums will grow to £26 million, £32 million, and £38 million in 2000, 2001, and 2002, respectively, from £20 million in 1999. However, if market conditions improve significantly, premiums will grow more rapidly.
-- Continued strong profitability for catastrophe business over the course of the underwriting cycle. The combined ratio for 1999 will be relatively poor at 106%, but better than that of peer London market companies. Results from 1999 are expected to return to below 100%, with average combined ratios sustained at less than 95%. Modest initial returns on capital are expected given the strong initial funding of the company, Standard & Poor's said. -- CreditWire
Credit Profile:
ISSUER CREDIT RATING
BRIT Insurance Co. Ltd.
New: Counterparty credit rtg A-/Stable/--
NEW RATING
Fincl strength rtg A-
 
Back To News

Search

Advanced Search
 
News Archive 2008   2007   2006   2005   2004   2003   2002   2001   2000   1999  
Sign up for Brit Alerts