LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a+” of Travelers Insurance Company Limited (TICL) (United Kingdom). The outlook for both ratings is stable.
The ratings of TICL reflect the support provided by St. Paul Fire and Marine Insurance Company (SPFM) in the form of an explicit guarantee covering all of TICL’s liabilities arising from its underwriting activities. SPFM is a subsidiary of TICL’s ultimate parent, The Travelers Companies, Inc. (Travelers) [NYSE: TRV]. TICL is Travelers’ main underwriting operation in the United Kingdom and Ireland. The ratings also reflect TICL’s strong stand-alone risk-adjusted capitalisation. Offsetting these strengths is the company’s weak underwriting performance.
TICL maintains strong risk-adjusted capitalisation with a sufficient cushion to absorb higher than expected losses. Shareholders’ funds are expected to fall by around 2% in 2015 from the GBP 504 million reported at year-end 2014.
The company has a solid business profile as a specialist underwriter of liability and commercial property business in the U.K. and also benefits from Travelers’ strong brand recognition. An expected decline in gross written premium (GWP) in 2015 in the range of 4% to 5% reflects competitive conditions in core markets and the later stages of a planned exit from certain classes as profitability challenges are addressed. GWP is expected to show modest growth, in the region of 2%, in 2016, supported by rate increases and new product offerings.
TICL’s underwriting record is weak as demonstrated by the 5-year average combined ratio of 115%. A combined ratio of 113% in 2014 was an improvement on a particularly weak 2013 level of 137%. Further improvement is projected over 2015 and 2016 as remedial underwriting and pricing actions take full effect, though the combined ratio is expected to remain over 100%.
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.
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