A.M. Best Assigns Ratings to Wuerttembergische Versicherung AG.OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of "a-" to Wuerttembergische Versicherung AG (WuerttVers) (Germany). The outlook on both ratings is stable. The ratings reflect the company's excellent business profile in the German market, stable earnings despite accelerating competition in Germany and improving risk adjusted capitalisation. The rating also factors A.M. Best's view of the financial strength of the parent company, Wuestenrot & Wuerttembergische AG (W&W), taking into account management's efforts to improve consolidated earnings and risk management. In A.M. Best's view, WuerttVers has an overall excellent business profile in the German market, which was further improved by the acquisition of Karlsruher Versicherung, in particular in southwestern Germany. WuerttVers also underwrites in the London market, which A.M. Best regards as complementary to its domestic portfolio but not as core. A.M. Best believes that both WuerttVers and Karlsruher Versicherung benefit from its proprietary tied agent network in Germany. A.M. Best expects gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. (of the combined group) to moderately grow by 1%-2% to EUR EUR In currencies, this is the abbreviation for the Euro. 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. 1.6 billion (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. 2.1 billion) in 2007, mainly driven by rating increases in the London market, which offsets a decline in premiums in Germany due to strong competition, but also due to cancellation of inadequately priced business. The UK branch generated gross premiums written of approximately EUR 275 million (USD 367 million) in 2006 comprising mainly property, financial institutions, professional indemnity, marine and aviation. The market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" through its proprietary tied agent network remains excellent throughout the domestic market. A.M. Best expects combined overall earnings--before tax and allocation to equalization In communications, techniques used to reduce distortion and compensate for signal loss (attenuation) over long distances. reserve--to remain stable at approximately EUR 100 million (USD 133 million) in 2007, translating into a return on premium of 8.3%. 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. results are likely to remain stable with a combined ratio between 96% and 97% as strong competition in the German motor market and higher commissions at the UK branch are compensated by favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. rate developments in certain international business lines. A.M. Best believes that the company is successful in restructuring the loss making portfolio of Karlsruher Versicherung; however, WuerttVers is likely to incur substantial integration costs of approximately EUR 15 million (USD 20 million). WuerttVers' risk-adjusted capitalisation is likely to continue to improve from higher (between EUR 30-40 million) allocation to the equalization reserve Equalization Reserve A long-term reserve that an insurance company keeps for the purpose of preventing cash-flow depletion in the event of a significant unforeseen catastrophe. , which compensates for the cash financed acquisition of Karlsruher Versicherung in 2007. A.M. Best believes that WuerttVers' claims reserves remain strong as evidenced by significant run-off profits in prior years, which A.M. Best expects to continue. A.M. Best believes that the management of WuerttVers' parent company, W&W, is successfully addressing risk management issues for the whole group but more specifically at the building society and mortgage bank, which triggered a restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of accounts. This should gradually lead to a reduction in the volatility of earnings. A.M. Best will closely monitor the effectiveness of the group's enterprise risk management. Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industries, including the banking and insurance sectors. For more information, visit www.ambest.com. |
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