Ratings Roundup: Insurance Barbados, SOLID

A.M. Best Co. has affirmed the financial strength rating of ‘A-‘ (Excellent) and issuer credit rating of “a-” of Insurance Corporation of Barbados Limited (ICBL), both with stable outlooks. The ratings reflect ICBL’s “solid capitalization, leading market presence in its domestic market, favorable operating results in recent years and its affiliation with Bermuda-based BF&M Limited, its majority owner, which is publicly traded on the Bermuda Stock Exchange,” Best explained. ICBL is publicly traded on the Barbados Stock Exchange. Best also said that as the leading P/C insurer in the Barbados market, the company “enjoys excellent brand name recognition. ICBL has achieved favorable underwriting results in recent years through prudent risk selection and underwriting discipline. Underwriting profitability has been augmented by consistent levels of investment income, and this has enabled the company to continue to enhance its capitalization. Furthermore, ICBL’s affiliation with BF&M Limited affords ICBL potential access to the group’s resources, including financial services, investment management expertise and information technology.” As partial offsetting factors, Best cited the “geographic concentration of ICBL’s business in Barbados, and the increasingly competitive market in which the company operates. ICBL, like other regional insurers, has significant exposure to catastrophic losses. The company manages this risk through the utilization of reinsurance to limit its catastrophe exposure to a manageable level and protect its surplus against frequency of events.”

A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of ‘B+’ (Good) and the issuer credit rating of “bbb-” of Swedish insurer SOLID Forsakringsaktiebolag.The outlook for both ratings remains stable. “Solid continues to maintain good risk-adjusted capitalization supported by its stable operating performance and the discontinuation of an inter-company loan in 2010,” said Best. As an offsetting factor the rating agency noted that Solid continues to rely on “other inter-company transactions, particularly the level of reinsurance ceded to an unrated affiliated company based in Switzerland and cash investments with Resurs Bank AB, an affiliated financial institution. However, the level of reliance on inter-company transactions is expected to reduce significantly in 2011.” Best said it anticipates that Solid’s stable “operating performance will be maintained in 2011, with the low loss ratios that characterize the company’s account likely to continue. An increase in Solid’s expense ratio is expected in 2010 due to its diversification into roadside assistance, but the impact on the reported year-end combined ratio is likely to be only a marginal increase from 90 percent in 2009. Solid has established a strong niche position for extended warranty business in the Swedish market. Gross written premiums are likely to increase marginally in 2010, from SEK 1 billion ($149 million) in 2009 due to expansion into other specialty lines of business, particularly the roadside assistance account.”