S&P Assigns BBB+ CPA To Gan Insurance.LONDON--(BUSINESS WIRE)--Standard & Poor's CreditWire 11/19/97--Standard & Poor's today assigned its triple 'B'-plus claims-paying ability rating to Gan Insurance Co. Ltd. (GICL GICL Gila Cliff Dwellings National Monument (US National Park Service) GICL Groupement des Industries du Caoutchouc du Luxembourg (Luxembourg Rubber Industries Group) GICL Graphics Language ), based on the consolidated operations of Gan Insurance Group in the U.K., which includes National Motor & Accident, Touchline Touchline The highest bid and lowest ask at market for a particular security during a given time in the trading day. Notes: The touchline just specifies the best bid or ask available for a particular stock. See also: Ask, Ask Size, Best Ask, Bid, Bid-Ask Spread, Spread , and Contingency Insurance. The rating only applies to GICL, which is the holding and principal operating company operating company A business that engages in transactions with outsiders. of Gan (U.K.) PLC's nonlife operations, and accounts for 85% of the group's nonlife premium income. Major rating factors: -- Strong disciplined management that is profit-focused and operationally independent from its French parent. Six years ago, virtually the entire top management was replaced following several years of consistently poor results. Since taking over, the new team has established a far more risk-averse strategy. -- Good business position that is derived from a diversified revenue stream and a wide range of stable distribution sources. The group represents the 13th largest nonlife entity in the U.K. and has a relatively stable 1.5% share of the market. -- Sound balance sheet characterized by a conservative investment philosophy, prudent reserving practices, and good 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. However, reinsurance recoverables on outstanding claims are high at 2.8 times (x) the published net equity at the end of 1996. -- GICL's profitability has improved significantly since 1992 in line with many of its competitors, following three years of losses. Pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. was 20.6 million pounds, 18.2 million pounds and 15.5 pounds million in 1996, 1995, and 1994, respectively, giving satisfactory returns on revenues of 3.6% in 1996 and 4.0% in 1995 and 1994. This remains weaker than peer companies and is unlikely to improve over the near term in a soft market rate environment. Downside risk Downside Risk An estimation of a security's potential to suffer a decline in price if the market conditions turn bad. Notes: You can think of this as an estimate of the amount that you could lose on a stock or other investment. is limited by the more stringent underwriting disciplines imposed since 1992. -- Adequate capitalization based on Standard & Poor's model, 111% at the end of 1996, which is appropriate for the rating category. Prospectively, capitalization will improve as 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. boost the net equity and premium volumes remain flat or even decline over the near term. -- Uncertainty at parent company level following the much publicized #2 billion injection from the French government and its impending im·pend intr.v. im·pend·ed, im·pend·ing, im·pends 1. To be about to occur: Her retirement is impending. 2. privatization privatization: see nationalization. privatization Transfer of government services or assets to the private sector. State-owned assets may be sold to private owners, or statutory restrictions on competition between privately and publicly owned . Standard & Poor's believes that GICL is, to a large extent, insulated from the troubles affecting the parent since for a number of years it has enjoyed a significant degree of autonomy, with separate management of underwriting, investments, reinsurance, and reserving practices. Standard & Poor's believes that Gan (France) will not dispose of GICL either before or immediately after privatization. Any such action would prompt an immediate review of the rating. Expectations: -- Capital will remain adequate and strengthen over the near term. -- Growth will be organic and very modest over the near term, as rates remain fiercely competitive in the core accounts. -- Operating performance will remain stable, with ROE's of 8%-12% and ROR's of 3-4%., Standard & Poor's said. -- CreditWire CONTACT: Damir Bettini, London (44) 171-826-3573 Copyright 1997, Standard & Poor's Rating Services For more information on criteria or subscriptions: http://www.ratings.standardpoor.com Today's News On The Net - Business Wire's full file on the Internet with Hyperlinks to your home page. URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. : http://www.businesswire.com |
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