A.M. Best Affirms Ratings of London General Insurance Company Limited and London General Life Company Limited
A.M. Best Co. has affirmed the financial strength ratings of A- (Excellent) and issuer credit ratings of “a-” of London General Insurance Company Limited (LGI) and London General Life Company Limited (LGL) (both domiciled in the United Kingdom). The outlook remains stable for all ratings.
LGI and LGL are likely to maintain excellent risk-adjusted capitalisation in 2010, supported by a modest increase in shareholders’ funds for both companies. LGI’s risk-adjusted capitalisation continues to benefit from letters of credit, which the company holds as collateral to mitigate reinsurer default risk.
LGI is expected to maintain strong technical performance in 2010, despite the ongoing effect of the economic downturn on the level of creditor claims. The company achieved an excellent technical profit of approximately GBP 14 million in 2009 (2008: GBP 12.7 million). The result benefited from the structured profit sharing agreements that LGI has in place with its main clients, which largely mitigated an increase in net claims incurred of approximately GBP 11.5 million.
LGL is expected to report an excellent technical result at year-end 2010, comparable to the GBP 1.6 million achieved in 2009. The company’s strong technical performance in 2009 was supported by profitable multi-year contracts written in prior years, and also by reduction in its long-term business provision of approximately GBP 14.8 million (2008: GBP 2 million).
LGI and LGL are expected to maintain their good specialist profile in the UK, Ireland and Europe. The companies share a broad client base, and their combined underwriting portfolio includes extended warranty, accidental damage and creditor insurance. The net premium income of both companies declined in 2009, mainly due to weak economic conditions in the UK and Europe. In addition, the growth of the companies’ UK business was restricted by the Competition Commission’s investigation into payment protection insurance.
For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at http://www.ambest.com/ratings/methodology.
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