AM Best Affirms Credit Ratings of Ecclesiastical Insurance Office plc
LONDON–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A
(Excellent) and the Long-Term Issuer Credit Rating of “a” of
Ecclesiastical Insurance Office plc (EIO) (United Kingdom). At the same
time, AM Best has affirmed the Long-Term Issue Credit Rating of “bbb” on
GBP 106,450,000, 8.625% non-cumulative irredeemable preference shares
issued by EIO. The outlook of these Credit Ratings (ratings) remains
stable.
The ratings reflect EIO’s balance sheet strength, which AM Best
categorises as very strong, as well as its adequate operating
performance, neutral business profile and appropriate enterprise risk
management (ERM).
EIO’s balance sheet strength is underpinned by risk-adjusted
capitalisation that AM Best expects to remain at the strongest level, as
measured by Best’s Capital Adequacy Ratio (BCAR), supported by good
internal capital generation. In addition, the company maintains a good
liquidity profile, with fixed-income securities and equities accounting
for the majority of its investment portfolio.
EIO has a track record of adequate operating profits, with technical
results supported by generally positive investment earnings. In 2018,
pre-tax profits fell to GBP 15 million from GBP 82 million in the prior
year, due to a marginal investment result driven by unrealised losses on
the company’s equity and fixed income portfolios. In the future, AM Best
expects EIO to produce a robust return on equity, albeit with some
volatility due to the relatively high allocation to equities in its
investment portfolio.
EIO has a specialist business profile offering insurance products and
risk management services in the faith, heritage, charity, education and
real estate markets, where it maintains a strong competitive position.
Offsetting factors include the geographical concentration of its
insurance portfolio in the UK and Ireland. Following a downward trend
from 2013 to 2015, gross written premiums have increased to GBP 357
million in 2018 from GBP 310 million in 2016 and are expected to
continue to grow gradually. EIO’s ERM capabilities are aligned
appropriately with its risk profile. The risk management framework
benefits from stringent controls introduced as part of Solvency II
implementation. Risk and capital management is supported by an internal
capital model, which was approved for regulatory use by the Prudential
Regulation Authority in July 2018.
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 Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
Contacts
William Keen-Tomlinson ACA
Financial Analyst
+44
20 7397 4395
will.keen-tomlinson@ambest.com
Tim Prince
Director, Analytics
+44 20 7397
0320
timothy.prince@ambest.com
Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644
james.peavy@ambest.com