LONDON--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” to R&Q Insurance (Malta) Limited (RQIM) (Malta). The outlook assigned to these Credit Ratings (ratings) is stable. At the same time, A.M. Best has affirmed the Long-Term ICR of “bbb-” of Randall & Quilter Investment Holdings Ltd. (RQIH) (Bermuda). The outlook of this rating is stable. RQIM is a subsidiary of RQIH.
The published rating of RQIH, as a non-operating insurance holding company (IHC), is determined by reference to the credit assessment of RQIH on a consolidated basis, and the normal subordination of IHC creditors to operating company policyholders. A.M. Best’s credit assessment of RQIH on a consolidated basis reflects its balance sheet strength, which A.M. Best categorises as strong, as well as its adequate operating performance, neutral business profile, and appropriate enterprise risk management (ERM).
RQIH owns, through its subsidiaries, non-life insurance portfolios in runoff and insurance entities that are open to new insurance business, including residual run-off exposures to Lloyd’s Syndicate 1991. Starting in 2016, RQIH also began writing programme business through two of its main operating subsidiaries, Accredited Surety and Casualty Company, Inc. and RQIM. RQIH’s strong profile in the small and medium-sized run-off market helps it to generate a flow of new profitable run-off acquisitions. It is important that a flow of new business is continually generated, as the profit arising from these acquisitions is essential for funding the group’s expenses and supporting its financial performance. Recently, RQIH has streamlined its business by disposing of non-core operations and focusing on legacy business, for which it has good expertise, and growing its programme business in the United States and Europe, by means of agreements with managing general agents and collaboration with large reinsures. A.M. Best expects the group’s profitability to improve as a result of these activities as it achieves cost efficiencies. Offsetting rating factors include the expected increasing dependence on reinsurance that likely will occur with the expansion and the execution risk underlying the shift in business strategy as well as recent organisational changes.
The ratings of RQIM reflect its balance sheet strength, which A.M. Best categorises as strong, as well as its adequate operating performance, limited business profile and appropriate ERM. RQIM’s ratings also benefit from one-notch of lift from its parent company, RQIH. Since its incorporation in 2013, RQIM has developed its profile as a run-off specialist for European non-life (re)insurers and captives, benefiting from the capabilities and profile of the wider R&Q group. RQIM has generated an adequate operating performance over the past four years (2013-2016), with an average return on equity of 5.3%. Although A.M. Best expects the company to report a marginal profit in 2017, the expansion of program business is expected to strengthen its prospective profitability. The company’s risk-adjusted capitalisation is likely to remain supportive of its strong balance sheet strength assessment, which also benefits from a low level of financial leverage and is offset by an increasing dependence on reinsurance.
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