A.M. Best Affirms Rating of Brit Insurance Limited.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Aug. 20, 2002 A.M. Best Co. has affirmed the A- (Excellent) rating of Brit Insurance Brit Insurance Holdings plc (LSE: BRE) is a London-based general insurance and reinsurance group. It is a member of the London Stock Exchange and a constituent of the FTSE 250 Index. Market capitalisation was over £850m as of mid-2005. Limited. The outlook is stable. The rating is based on the company's continued excellent capitalisation and liquidity levels, good underlying operating performance, improving business position and diversification, and the strength of its management and underwriting teams. The conservative estimation of exposure to the World Trade Center loss gives a clear indication of management's cautious stance to reserving. Offsetting factors include Brit's modest market profile and low level of diversification by business line which can result in volatile financial performance due to the high dependence on property catastrophe business. Excellent capitalisation: The A.M. Best risk-based capital model incorporates factors such as the company's exposure to high-risk lines, high but reducing dependency on reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. and lack of diversification. At year-end 2001, policyholders' surplus of GBP GBP In currencies, this is the abbreviation for the British Pound. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 70.6 million (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 102.5 million)--adjusted for equalisation Noun 1. equalisation - the act of making equal or uniform equalization, leveling human action, human activity, act, deed - something that people do or cause to happen provisions--supported a low volume of earned premium Earned premium is the portion of an insurance written premium which is considered "earned" by the insurer, based on the part of the policy period that the insurance has been in effect, and during which the insurer has been exposed to loss. at GBP 20.5 million (USD 29.8 million). Excellent liquidity: Brit brit also britt n. 1. The young of herring and similar fish. 2. Minute marine organisms, such as crustaceans of the genus Calanus, that are a major source of food for right whales. maintains minimal exposure to equity markets at 2.7% of current invested assets, with the majority of its investments held in cash and cash equivalents. Liquidity levels remain excellent and would allow a small increase in exposure to equities, which is currently under consideration. Continued good underlying operating performance: Market conditions are currently highly favourable for catastrophe retrocession RETROCESSION, civil law. When the assignee of heritable rights conveys his rights back to the cedent, it is called a retrocession. Erskine, Prin. B. 3, t. 5, n. 1; Dict. do Jur. h.t. and excess of loss lines, which form the mainstay of Brit's account. Assuming an average loss frequency for large catastrophe events, A.M. Best expects Brit to achieve a double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" post tax ROE in 2002 to 2004, recovering from an after-tax loss in 2001 of GBP 9.4 million (USD 13.6 million) resulting from exposure to the World Trade Center disaster. The impact of hardening hardening, in metallurgy, treatment of metals to increase their resistance to penetration. A metal is harder when it has small grains, which result when the metal is cooled rapidly. rates on outward reinsurance protection has been partly mitigated by the long-term nature of several of the current outward protections and reduced reliance on reinsurance protection due to improved terms and reduced level of exposure on inwards business. Improving business position and diversification: Brit remains largely reliant on two main business lines, catastrophe and financial risks. However, the range of business lines written is likely to increase in the next 12 to 24 months as some lines of business currently written by the Brit Syndicate 2987 are allocated to the company. The level of diversification by client has increased significantly over the last two years and a much broader and well-balanced spread of broker and retrocessional support has been achieved. Strong management and underwriting team: A.M. Best believes Brit benefits from the management team's considerable knowledge and experience of the business lines written and tight controls over underwriting. Standards of management information and corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. in all aspects of the business continue to be high. Expectations: - Prospectively, A.M. Best expects surplus to increase through retained earnings, increased equalisation provisions and potentially through further allocation of capital from the company's parent, Brit Insurance Holdings PLC. The company is expected to remain committed to maintaining an excellent level of capitalisation as measured on a risk-based adjusted basis. - The company will continue with its product line diversification plan by introducing new lines of business in the next twelve months. These will require a substantial increase in capital which the holding company is currently researching. - In the absence of further extraordinary catastrophic events, A.M. Best expects the company to return to profitability in 2002 and 2003, benefiting from the much improved rating environment which should also assist Brit in its plan to achieve further growth in overall business volume in the next three years. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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