A.M. Best Affirms Ratings of W. R. Berkley Insurance (Europe), Limited

A.M. Best Europe – Ratings Services Limited has affirmed the financial strength rating of A (Excellent) and the issuer credit rating (ICR) of “a” of W. R. Berkley Insurance (Europe), Limited (WRB Europe) (United Kingdom). The outlook on both ratings remains stable.

WRB Europe is expected to maintain excellent stand-alone risk-adjusted capitalisation in 2010, supported by full retention of earnings. The ratings also reflect the implicit support provided by the company’s ultimate parent, W. R. Berkley Corporation (WRB). In A.M Best’s opinion, WRB Europe continues to be strategically important to WRB as a means of access to the UK and European insurance markets.

WRB Europe’s combined ratio is expected to weaken in 2010 from 94% in 2009 due to continued competitive conditions in core lines of business. A.M. Best expects technical performance to be supported by a release from prior year reserves, albeit lower than the GBP 2.5 million released in 2009. The company maintains a risk-averse investment strategy with no equity holdings, which provides some protection against investment market volatility. In 2010, a positive net investment yield is anticipated (including realised and unrealised gains and losses) (in 2009: 3%).

WRB Europe continues to have a good profile in the UK and London insurance markets, principally as an underwriter of small to medium-sized professional indemnity business. The company has improved the diversification of its portfolio since inception, most significantly with the addition of a construction and engineering account in 2007 and the establishment of a Norwegian branch office to underwrite marine hull and cargo business in 2009. Although material growth in net premiums written is anticipated for marine lines of business in 2010, A.M. Best expects WRB Europe to maintain its record of moderating growth plans, if profitability targets cannot be achieved.

The principal methodology used in determining these ratings is http://www.ambest.com/ratings/methodology/bcrm.pdf, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; and “Rating Members of Insurance Groups”. Methodologies can be found at http://www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures, http://www.ambest.co.uk/AMBERSDisclosure.pdf.