AM Best Affirms Credit Ratings of United Kingdom Mutual War Risks Association Limited
May 01 2024 - 10:30AM
Business Wire
AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-”
(Excellent) of United Kingdom Mutual War Risks Association Limited
(UK War Risks or the Association) (United Kingdom). The outlook of
these Credit Ratings (ratings) is stable.
The ratings reflect UK War Risks’ balance sheet strength, which
AM Best assesses as very strong, as well as its adequate operating
performance, limited business profile and appropriate enterprise
risk management.
UK War Risks’ balance sheet strength is underpinned by its
risk-adjusted capitalisation at the strongest level, as measured by
Best’s Capital Adequacy Ratio (BCAR). Capital consumption is driven
largely by investment risk, with UK War Risks ceding almost all of
its underwriting exposure to third-party reinsurers, barring a
marginal deductible for certain risks. The balance sheet strength
assessment also considers the Association’s small capital base and
material dependence on reinsurance. Counterparty credit risk is
mitigated partly by the excellent credit quality and good
diversification of the Association’s reinsurance panel.
While UK War Risks’ overall earnings in recent years have
benefited significantly from elevated premium levels, historical
operating performance has been dependent on investments earnings
due to the Association’s limited risk retention. Prospective
operating performance is expected to remain sensitive to
fluctuations in premium volume and volatility in investment
results, with the latter being a result of the Association’s
exposure to riskier asset classes such as equities and alternative
investments.
UK War Risks has an established profile as a specialist
underwriter of marine war risk insurance, covering a range of
commercial vessels worldwide. However, the Association is of
limited size and its niche underwriting portfolio has a
concentrated membership base. The loss of a single large member
could lead to a sharp decline in underwriting earnings.
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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Stanislav Stoev, ACCA, CFA Senior Financial
Analyst +44 20 7397 0306 stanislav.stoev@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310 christopher.sharkey@ambest.com
Tim Prince Director, Analytics +44 20 7397
0320 timothy.prince@ambest.com Al Slavin Senior
Public Relations Specialist +1 908 882 2318
al.slavin@ambest.com