AM Best Downgrades Credit Ratings of Premier Insurance Company Limited; Places Credit Ratings Under Review With Negative Implications

LONDON--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating to “bbb-” (Good) from “bbb” (Good) of Premier Insurance Company Limited (Gibraltar). Concurrently, AM Best has placed these Credit Ratings (ratings) under review with negative implications. The company is wholly owned by Premier Underwriting Holdings (Gibraltar) Limited (Premier), which is the ultimate non-operating holding company and consolidating rating unit for the group.

The ratings reflect Premier’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).

The downgrades reflect the revision of Premier’s ERM assessment to marginal from appropriate. This follows recently observed deficiencies in governance and operational controls related to the management of third-party claims handlers.

Based on its unaudited financial statements, Premier is expected to report a material operating loss for 2022 and a decline in its capital and surplus position. This follows a material increase in booked reserves at year-end 2022, due to uncertainty caused by claims data quality issues arising from a change in the claims management system used by Premier’s third-party claims handler, who has since been replaced. In addition, the company is experiencing claims settlement delays, particularly for credit hire claims, which has led to a divergence between expected and current reserve release patterns.

The ratings have been placed under review with negative implications whilst AM Best completes its assessment of the full impact of operational and reserving issues related to Premier’s claims handling process on its credit profile, particularly its underwriting performance and risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR).

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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