AM Best Assigns Credit Ratings to Protect Insurance PCC Limited

LONDON--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of B (Fair) and a Long-Term Issuer Credit Rating of “bb+” (Fair) to Protect Insurance PCC Limited (Protect) (Gibraltar). The outlook assigned to these Credit Ratings (ratings) is stable. Protect is an unincorporated cell company (UCC), with Cell Universal as its only operational cell. Both Protect and Cell Universal are owned by Universal Holdings (Guernsey) Limited.

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

Protect’s strong balance sheet strength assessment considers its initial financing capital of GBP 5.75 million, and AM Best’s expectation that organic capital generation will support the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), over the current business plan’s duration. The assessment also factors in the company’s conservative asset allocation. A partially offsetting rating factor is Protect’s small absolute capital base, which increases the potential for volatility of its solvency position.

Protect operates through its first single Cell Universal, leveraging the relationships of its affiliated insurance broker, All Broker Services Limited, to build a profitable portfolio of ancillary insurance products. Protect is expected to report a loss in 2025 (its first year of operation), reflecting its start-up nature. Operating performance is expected to improve rapidly as the UCC scales up, with prospective profits expected to be driven by solid underwriting profitability and modest, albeit stable, investment results.

Protect’s underwriting book of business is expected to be highly concentrated, with the UCC writing primarily ancillary business in the highly competitive U.K. market. This makes its business model vulnerable to potential regulatory changes in the United Kingdom, a key limiting factor in the business profile assessment, and a driver of its elevated risk profile. The ERM assessment also captures the significant execution risk in Protect’s initial years of operation.

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