LONDON--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb” to Irwell Insurance Company Limited (Irwell) (United Kingdom). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Irwell’s balance sheet strength, which A.M. Best categorises as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The company’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), was assessed at the strongest level at 31 March 2018. Irwell has a high quality asset base and excellent liquidity position, highlighted by a current liquidity ratio of 120%. A.M. Best considers Irwell’s investment portfolio to be conservative and is focused toward fixed income instruments. The company has a small capital base, with capital and surplus of GBP 21.5 million at financial year-end 31 March 2018, which can give rise to fluctuations in its solvency position and is considered an offsetting factor to A.M. Best’s balance sheet strength assessment.
Irwell has generated a five-year average return on equity of 11.9%, and whilst the company has generated an operating profit since 2010, results have been relatively volatile. Irwell has a track record of solid technical performance, and the company’s strong relationship with the Peninsula Business Services Group Ltd (PBSG), partially as a result of common shareholders, gives rise to the excellent flexibility Irwell has in its pricing and commission arrangements, which helps to control profitability. Investment results are modest due to the company’s conservative investment allocation, and during the financial year ending 31 March 2018, Irwell reported an investment yield of 1.7%.
Whilst A.M. Best considers Irwell’s business profile to be limited, the company has a niche position as a provider of insurance products for agents operating within PBSG. Irwell is considered a specialist in providing legal expenses cover, and given the company’s focus toward this line of business, it is materially exposed to legislative changes relating to employment law. Net written premiums increased by 19% to GBP 27 million for financial year-end 31 March 2018, driven by the expansion of PBSG.
A.M. Best considers the company’s ERM capability to be in line with its risk profile. Irwell operates using an outsourcing model with a significant amount of authority delegated to its distribution partners. Ensuring sufficient oversight of its partners and consultants is one of Irwell’s principal risks; however, this is mitigated by regular monitoring and an experienced management team.
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