LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Irwell Insurance Company Limited (Irwell) (United Kingdom). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Irwell’s balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
Irwell’s balance sheet strength assessment is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), for financial year-end 31 March 2019 (YE19). Irwell has a high quality asset base and very strong liquidity position, highlighted by liquid assets covering insurance reserves by 145% at YE19. An offsetting factor is company’s small capital base (capital and surplus of GBP 23 million at YE19), which can give rise to fluctuations in its solvency position.
Irwell’s adequate operating performance is underpinned by a solid five-year (2015-2019) weighted average return on equity of 11%, although results have been volatile. Net earnings were driven by underwriting profits, with a robust five-year (2015-2019) weighted average combined ratio of 93%. Irwell’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 the company control profitability. Operating earnings are supported by modest but relatively stable investment results, reflecting the company’s conservative investment allocation.
Irwell benefits from a niche position as a provider of insurance products to clients of its affiliated companies operating within PBSG. Irwell is considered a specialist in providing legal expenses and general liability insurance for advice on human resources, tax investigation and health & safety services in the United Kingdom, although this materially exposes it to legislative changes related to employment law.
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