A.M. Best Assigns Ratings to Electrical Contractors’ Insurance Company Limited

LONDON--(BUSINESS WIRE)-- A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of “a-” to Electrical Contractors’Insurance Company Limited (ECIC) (United Kingdom).The outlook for both ratings is stable.

ECIC’s risk-adjusted capitalisation is strong and expected to improve in 2010, driven by de-risking of its investment portfolio and an increase in retained earnings. An offsetting factor is the high reliance on third party reinsurance, particularly quota share agreements, with the company ceding approximately 50% of gross premiums written. This exposes ECIC to upward movement in reinsurance rates and credit risk. Concern is partly mitigated by the company’s consistent technical profitability, from which quota share reinsurers benefit, and the good credit quality of reinsurers used.

In 2010, a good combined ratio between 80% and 90% is anticipated, despite challenging market conditions in the UK. ECIC has a good underwriting record, which is underpinned by excellent knowledge of its core market. In 2009, the company produced a strong combined ratio of 81%, despite reserve strengthening for discontinued business and above average large loss experience. Prospective investment performance is expected to be less volatile than in the past, owing to a reallocation of a proportion of investments from equities to high quality fixed income securities.

ECIC has a good niche business profile providing insurance to electrical and mechanical building services contractors and other specialist construction professionals in the UK. The company benefits from its relationship with its parent, the trade organisation Electrical Contractors Association, which provides access to a large membership base. Distribution is primarily via a network of about 450 brokers across the UK and from 2010 will be supported by a new electronic trading platform.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit 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 www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Co.
Analysts
Stephen Mullan, +(44) 20 7626 6264
[email protected]
or
Catherine Thomas, +(44) 20 7626 6264
[email protected]
or
Public Relations
Rachelle Morrow, +(1) 908 439 2200, ext. 5378
[email protected]
or
Jim Peavy, +(1) 908 439 2200, ext. 5644
[email protected]

Source: A.M. Best Co.