A.M. Best Affirms Rating of Heddington Insurance (U.K.) Limited; Assigns Issuer Credit Rating.OLDWICK, N.J. -- 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 (Excellent) of Heddington Insurance (U.K.) Limited (HUK) (United Kingdom), a captive company of Chevron Corporation “CVX” redirects here. For the United States Navy future aircraft carrier program, see United States Navy CVN-21 program. Chevron Corporation (NYSE: CVX) is one of the world's largest global energy companies. , and assigned an issuer credit rating of "a+". The outlook on both ratings is stable. The ratings reflect HUK's excellent prospective risk-adjusted capitalisation and improving profitability. HUK benefits from substantial 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. support from its immediate parent, Heddington Insurance Ltd. (HIL), in the form of an 80% quota share For This article is about quota shares (shares of the quota). For other usages of quota, see, see . A quota share is a specified number or percentage of the allotment as a whole (quota), that is prescribed to each individual entity (see Non-tariff barriers to trade). of business written, reflecting HUK's importance within the group. An offsetting factor is the company's volatile business portfolio. A.M. Best believes that HUK's book of business is likely to significantly reduce in 2006, with net premium income likely to decline by approximately 50%-60% (compared to the anticipated level of 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. 11 million in 2005), reflecting a volatile business profile. The expected decrease in premium income emanates from the likely change in business allocation within the group captives. In A.M. Best's opinion, the company's prospective risk-adjusted capitalisation is likely to remain excellent over the next two years, factoring full earnings retention and the lower risk-adjusted capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. to support both declining levels of net premium income and, consequently, net loss reserves. HUK's net risk exposure is deemed to be low given the excellent reinsurance programme with HIL. A.M. Best believes that HUK's profitability levels are likely to improve over the next two years as a result of modest anticipated underwriting profits Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums. driven by a forecasted benign claims experience. This is likely to lead to net reserves release within the range of USD 500,000-700,000 despite an expected increase to approximately 115% of the already high expense ratio (95.4% in 2004). Over the same period, net profits are expected to improve to approximately USD 2 million (compared to a loss of USD 1.1 million in 2004) and lead to an increase of the return on equity to approximately 3% (compared to -2.5% in 2004). For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. 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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