LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Ratings of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of Accredited Surety and Casualty Company, Inc. (ASCC) (Orlando, FL) and Accredited Insurance (Europe) Limited (AIEL) (Malta). Concurrently, AM Best has affirmed the Long-Term ICR of “bbb-” of Randall & Quilter Investment Holdings Ltd. (R&Q) (Bermuda). The outlook of these Credit Ratings (ratings) is stable.
The ratings of ASCC and AIEL reflect the consolidated balance sheet strength of R&Q [AIM: RQIH], which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The rating of R&Q, as a non-operating insurance holding company, is determined by reference to the credit assessment of R&Q on a consolidated basis, and the normal subordination of holding company creditors to operating company policyholders.
As wholly owned entities of R&Q, ASCC and AIEL are strategically important to and integrated within the Randall & Quilter group (collectively referred to as the group). They are pivotal to the group’s growing program business, providing insurance services to managing general agents (MGA), and hold essential licences for legacy business in the United States and Europe.
The group’s balance sheet strength is underpinned by its risk-adjusted capitalisation being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Risk-adjusted capitalisation was bolstered by a GBP 103.5 million capital raise during 2019, which is expected to be utilised fully by business growth over the longer term. Financial leverage was elevated at year-end 2018, at approximately 46%; however, the subsequent capital raise reduced this significantly, and financial leverage is expected to be approximately 34% at year-end 2019.
Offsetting rating factors include execution risk relating to the successful growth of R&Q’s programme business, which involves the group providing fronting services to MGAs, along with increasing dependence on reinsurance as this programme business grows. Operating performance remains adequate, with the group reporting robust profitability in recent years and a five-year weighted average return on equity of 4.4% (2014-2018). AM Best expects that R&Q’s strong position in the small and medium-sized run-off market will enable it to generate a flow of profitable new business over the coming years.
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