A.M. Best Affirms Rating of Cornhill Insurance PLC.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Oct. 7, 2002 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength rating of A++ (Superior) of Cornhill Insurance PLC (London). The rating reflects A.M. Best's view of Cornhill as a core subsidiary of its ultimate parent, Allianz Aktiengesellschaft AG (rated A++ with a negative outlook), its excellent domestic business position and maintenance of an excellent risk-based capital base. The main offsetting factor is Cornhill's historically weak, although improving, underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. performance. The outlook is negative. Core status--A.M. Best regards Cornhill as a core entity to Allianz. Cornhill is the fourth largest non-life writer in the Allianz group, accounting for approximately 6% of the group's gross premium. In addition, Cornhill provides valuable expertise in engineering and warranty business to the Allianz group. The company will be renamed Allianz-Cornhill in early 2003, reflecting Allianz's strong commitment to the company and Allianz's world-wide branding strategy. Excellent business position--A.M. Best believes that Cornhill's business position benefits from a strong brand name and is enhanced by its membership in the Allianz group. Cornhill is a leading player in the UK non-life insurance market. Non-life gross premiums increased by 20% to 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. 1,216 million in 2001 (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. 1,896.9 million). In addition, Cornhill's position in some sizeable `niche' classes such as animal health and engineering and inspection business represent a competitive advantage. Although geographical diversification is limited, focussed predominantly on the UK, the portfolio is well spread by business line and by source of distribution. Weak but improving operating performance--Cornhill announced pre-tax losses prior to 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 reserve movements in 2000 and 2001 of GBP 96.6 million (USD 150.7 million) and GBP 77.5 million (USD 120.9 million) respectively, mainly due to non-life underwriting losses--GBP 62 million in 2001 (USD 96.7 million)--and unrealised losses on equities--GBP 134.8 million in the 2001 non-life portfolio (USD 210.3 million). Underwriting performance is improving. A.M. Best expects the combined ratio to improve to 101% at year-end 2002 from 102.5% at year-end 2001 and 115.9% at year-end 2000, due to better market conditions, refocus Verb 1. refocus - focus once again; The physicist refocused the light beam" focus - cause to converge on or toward a central point; "Focus the light on this image" 2. on core UK domestic business lines and an increasing emphasis on underwriting discipline. Cornhill has recently introduced an intensive practical training programme for all underwriters which is expected to result in further performance gains. However, any improvement in the overall earnings will be minimal, as investment returns will be depressed due to further capital losses on equity values and continued low interest rates. Excellent risk-adjusted capital on a standalone stand·a·lone adj. Self-contained and usually independently operating: a standalone computer terminal. basis according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. A.M. Best's capital model--In late 2001, Allianz AG injected in·ject·ed adj. 1. Of or relating to a substance introduced into the body. 2. Of or relating to a blood vessel that is visibly distended with blood. injected 1. introduced by injection. 2. congested. capital of GBP 155 million (USD 214.8 million) into Cornhill in order to compensate for the loss in 2000 and the expected loss in 2001. Prospectively, A.M. Best expects capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. will be somewhat alleviated by the reduced exposure to international and MAT business. Expectations: - Cornhill's risk-based capitalisation will be maintained at a minimum of the present level. - Underwriting performance will improve further in 2003. - Overall financial performance will meet Allianz's expectations. 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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