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 of UK War Risks reflect its excellent risk-adjusted capitalisation, its track record of adequate operating performance and its established business profile as a specialist underwriter of war risk insurance for ships.
Offsetting rating factors include the Club’s small capital base and concentrated membership profile. In addition, 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. Although this approach protects its capital base against adverse loss experience, the Club is exposed to counterparty credit risk and to potentially disruptive upward movement in the cost of reinsurance. This is mitigated somewhat by the Club’s excellent loss record, as well as the diversity and strong credit quality of its reinsurers.
The Club has a track record of adequate, albeit volatile, operating performance. For the year ending February 2017, A.M. Best expects UK War Risks to report a positive operating result, supported by strong investment performance. The Club’s risk-adjusted capitalisation is likely to remain excellent.
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.
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