A.M. Best Assigns Ratings to GBG Insurance Limited

LONDON--(BUSINESS WIRE)-- A.M. Best Europe – Rating Services Limited has assigned a financial strength rating (FSR) of B+ (Good) and issuer credit rating (ICR) of “bbb-” to GBG Insurance Limited (GBG) (Guernsey). The outlook for both ratings is stable.

The ratings of GBG reflect the company's adequate level of prospective risk-adjusted capitalisation, good anticipated financial performance and modest business profile. Offsetting the rating is a relatively high level of debt within its ultimate parent, Saxon Lane.

A.M. Best considers that GBG’s capital base of USD 11.4 million is supported by a conservative investment profile and a reinsurance panel of excellent credit quality. Furthermore, A.M. Best anticipates that with the full retention of profits over the medium term, GBG’s capital base is likely to grow relatively rapidly and keep pace with the expected increases in adjusted capital requirements.

A low level of premium retention combined with GBG’s track record as a profitable brokerage supports A.M. Best’s anticipation of a good level of profitability over both the short and medium term, with underwriting results driving overall profits. In 2011, A.M. Best expects GBG to report underwriting profits in the region of USD 3.5 million from a premium income of approximately USD 40 million.

Although operating within a relatively fragmented niche market of expatriate health and life insurance, A.M. Best considers that GBG is small compared to many of its more diversified peers and is likely to face significant competition as it attempts to grow its book of commercial business. Supporting GBG’s business profile is a strategic alliance with Chubb that allows for both marketing and technical support over the term of the company’s business plans.

Although GBG does not have any debt, its ultimate holding company, , remains relatively highly leveraged. At June 30, 2011, A.M. Best anticipates that Saxon Lane will hold senior debt of USD 5.5 million, shareholders’ funds of around USD 9 million and goodwill of USD 4.2 million.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilised include: “Risk Management and the Rating Process for Insurance Companies” and “Understanding Universal BCAR”. Methodologies can be found at www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company.Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2011 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best
Timothy Prince
Financial Analyst
+(44) 20 7397 0320
[email protected]
or
Carlos Wong-Fupuy
Senior Director
+(44) 20 7397 0287
[email protected]
or
Rachelle Morrow
Senior Manager, Public Relations
+(1) 908 439 2200, ext. 5378
[email protected]
or
Jim Peavy
Assistant Vice President, Public Relations
+(1) 908 439 2200, ext. 5644
[email protected]

Source: A.M. Best Company