A.M. Best Affirms Credit Ratings of The United Kingdom Mutual War Risks Association Ltd.

Business Wire

LONDON--(BUSINESS WIRE)-- A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of The United Kingdom Mutual War Risks Association Ltd. (UK War Risks or the Club) (United Kingdom). The outlook of these Credit Ratings (ratings) remains stable.

The ratings reflect UK War Risks’ balance sheet strength, which A.M. Best categorises as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

UK War Risks’ balance sheet strength is underpinned by risk-adjusted capitalisation that is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Offsetting rating factors include the Club’s small capital base and its material dependence on reinsurance. UK War Risks cedes almost all of its underwriting risk to third-party reinsurers, retaining only a small deductible on one part of its reinsurance programme. The Club benefits from an excellent and diversified reinsurance panel, which somewhat offsets its high exposure to counterparty credit risk.

UK War Risks has an adequate, albeit volatile, earnings track record, as demonstrated by a five-year average return on equity of 4% (2014-2018). Operating results are expected to remain dependent on investment performance, which has exhibited volatility due to the Club’s significant exposure to equity markets. Although UK War Risks benefits from an excellent loss record, it is exposed to the potentially disruptive upward movement in the cost of reinsurance.

The Club has an established business profile as a specialist underwriter of war risk insurance for ships. However, the Club’s business profile is limited due to its relatively small size, concentrated membership base and focus on a small underwriting niche.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

Konstantin Langowski, +44 20 7397 0318

Financial Analyst

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Tim Prince, +44 20 7397 0320

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tim.prince@ambest.com

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Christopher Sharkey, +1-908-439-2200, ext. 5159

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christopher.sharkey@ambest.com

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Jim Peavy, +1-908-439-2200, ext. 5644

Director, Public Relations

james.peavy@ambest.com