A.M. Best Affirms Rating of Sunderland Marine.Business Editors A.M. Best Co. has affirmed the A- (excellent) financial strength rating of Sunderland Marine Mutual Insurance Company, Sunderland, United Kingdom (SMMI SMMI Salesian Missionaries of Mary Immaculate SMMI Single Man Machine Interface SMMI Synchronous Main Memory Interface ). At the same time, the rating has been removed from under review with negative implications where it was placed on December, 3rd following a deterioration in free reserves Free reserves Excess reserves minus member bank borrowings at the Fed. as a result of losses on its equity portfolio. A.M. Best believes that the subsequent elimination of equity exposure significantly reduces the possibility of a further deterioration in free reserves. The rating reflects the company's excellent business profile in specialist marine insurance sectors, improved prospective operating performance and excellent capital strength on a risk adjusted basis. Offsetting these positive factors is SMMI's heavy reliance upon outwards 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. . Excellent business profile--SMMI is a leading insurer of fishing, charter and small commercial vessels (70% of GWP GWP Global Warming Potential GWP Global Water Partnership GWP Gift With Purchase GWP Guinea-Bissau Peso (currency code: now GNF) GWP German Wirehaired Pointer (dog breed) GWP Gross World Product ) and aquaculture aquaculture, the raising and harvesting of fresh- and saltwater plants and animals. The most economically important form of aquaculture is fish farming, an industry that accounts for an ever increasing share of world fisheries production. (25%), a sector in which SMMI has developed very specialized risk management techniques. The company enjoys a geographically well-diversified portfolio Well-diversified portfolio A portfolio that includes a variety of securities so that the weight of any security is small. The risk of a well-diversified portfolio closely approximates the systematic risk of the overall market, and the unsystematic risk of each security has been and has underwriting operations in the UK and Holland and branch offices in North America, Australia and New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. . Improved prospective operating performance--The introduction of a cost cutting programme, the absence of any foreseen extraordinary expenses and the strategic decision to remove its equity exposure--the whole equity book was divested in 2001--are likely lead to an operating profit of between 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. 1.3 million - GBP 1.7 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. 1.9 million - USD 2.4 million) at year-end 2002. The introduction of stricter underwriting guidelines in the current positive hard-rate environment, whilst maintaining high standards of service, are likely to contribute to a slight reduction of up to 1% in the company's loss ratio to 74% for 2002. Excellent capitalization--Capital is expected to remain supportive of the company's current rating level according to A.M. Best's risk adjusted capital model, with a capital adequacy level of 133% at year-end 2002. In addition, SMMI has excellent financial flexibility through its facility to introduce supplementary calls on members which can be used to bolster free reserves/surplus, if required. Reliance on outwards reinsurance--SMMI cedes a high 34% of gross premiums, which is at the top end of its peer group. In the current rate environment, A.M. Best would expect further increases in the company's reinsurance cost. However, the company has revised its 2002 programme and increased deductibles to offset the effect of escalating reinsurance costs. Expectations: - SMMI will maintain its position as a leading provider of insurance to the global fishing and aquaculture industries. - The company is likely to maintain its risk-adjusted level of capitalization. - The company will continue to maintain a strong and comprehensive reinsurance programme with no expected change in security. 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. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion