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. (ASC) (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) [AIM: RQIH]. The outlook of these Credit Ratings (ratings) is stable. ASC and AIEL are wholly owned entities of R&Q.
The ratings of ASC and AIEL reflect the consolidated balance sheet strength of R&Q, which AM Best categorises as very strong, as well as R&Q’s 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.
In AM Best’s view, ASC 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 (MGAs), and hold essential licences for legacy business in the United States and Europe.
The R&Q group’s consolidated balance sheet strength is underpinned by its risk-adjusted capitalisation being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). While risk-adjusted capitalisation is likely to diminish in the medium term as a result of significant growth plans, AM Best expects R&Q to maintain its BCAR score at the strongest level. The group has continued to demonstrate strong financial flexibility in 2020 through the issuance of USD 20 million in ordinary shares and USD 80 million in preference shares. Adjusted debt leverage was 29% at year-end 2019 (2018: 40%), and is expected to remain at or below this level in the medium term. Operating performance remains adequate, with the group reporting robust profitability in recent years and a five-year weighted average return-on-equity ratio of 9.9% (2015-2019). AM Best expects that R&Q’s expertise in closing small, and increasingly medium-sized, run-off deals will enable it to generate a flow of profitable new business over the coming years.
Offsetting rating factors include execution risk relating to the profitable expansion of R&Q’s program business, which involves the group providing fronting services to MGAs, along with increasing dependence on reinsurance as this business grows.
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