A.M. Best Affirms Ratings of Inter-Industry Insurance Company Limited and Insurco Ltd; Assigns Issuer Credit Rating to Insurco.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of B+ (Very Good) of Inter-Industry Insurance Company (III) (Isle of Man Noun 1. Isle of Man - one of the British Isles in the Irish Sea Man British Isles - Great Britain and Ireland and adjacent islands in the north Atlantic ) and its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Insurco Limited (Insurco) (Isle of Man). At the same time, A.M. Best has affirmed the issuer credit rating (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "bbb-" of III and assigned an ICR of "bbb-" to Insurco. The outlook on all ratings is stable. The ratings reflect III's solid overall risk-adjusted capitalisation and strong, but volatile, operating performance. Offsetting factors are the lack of diversification by business line and the absence of 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. protection. On a risk-adjusted basis, A.M. Best believes III's capital position will remain solid during 2006 and 2007 due to expected moderate premium growth and stable, though modest, retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. . A.M. Best expects the company's loss ratio at year-end 2006 and 2007 to remain in line with the 2005 level of 25.7% due to continuing stringent underwriting and risk controls. A.M. Best forecasts that III's operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. ratio is likely to remain very high at approximately 50%-55% in 2006-07 (compared to 55.6% in the previous year), reflecting the cost of the company's risk management controls to maintain the low loss ratio. III operates in specialty chemical A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. and manufactured buildings markets, where it provides commercial general liability and umbrella cover through Insurco. In A.M. Best's opinion, the company's limited business profile, which is comprised of a small number of insureds written through Insurco, the high level of exposure per risk relative to capital and surplus, and a lack of reinsurance protection of its own retention results both in potential earnings volatility and exposes risk-adjusted capitalisation to significant deterioration in the event of large losses. For Best's Ratings, 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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