Press Release - DECEMBER 21, 2017
A.M. Best Affirms Credit Ratings of Global Indemnity Limited and Its Subsidiaries
FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 21, 2017
Additionally, A.M. Best has affirmed the Long-Term Issue Credit Rating (Long-Term IR) of “bbb-” on Global Indemnity’s $100 million 7.75% subordinated notes offering due 2045, and the $130 million 7.875% subordinated note offering due 2047, as well as the indicative Long-Term IRs on its shelf registration of “bbb” on senior unsecured debt, “bbb-” on subordinated unsecured debt and “bb+” on the preferred stock. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies.)
The ratings of Global Indemnity Re are based on the consolidated results of the company and its six U.S.-based insurance subsidiaries. The ratings consider the key roles that each of these member companies play, and reflect the organization’s balance sheet strength, which A.M. Best categorizes as strongest, adequate operating performance, neutral business profile and appropriate enterprise risk management.
The strong capital position continues to reflect ample support for the group’s prospective premium growth, including the acquisition of American Reliable Insurance Company (American Reliable) in 2015. Financial flexibility is also available via Global Indemnity Re’s ultimate parent company, Global Indemnity. Through its six member inter-company pool, the organization targets a diverse mix of specialty niche business that is generally not offered in the standard insurance marketplace. Each company serves a specific market or distribution channel which provides the group access to a substantial amount of commercial and personal lines business in the United States. U.S.-sourced business accounts for the lion’s share of the group’s revenues, as these U.S. insurers cede approximately 50% of the net retained liabilities to Global Indemnity Re and retain the remaining 50%. These companies, which comprise the vast majority of business retained by Global Indemnity Re, have reported profitable underwriting and operating results over most of the past decade.
Upon its acquisition of American Reliable in 2015, Global Indemnity Re gained immediate access to more than $250 million of specialty personal lines and agricultural business, which nearly doubled its U.S. writings. The acquisition also complemented Global Indemnity Re’s existing business with minimal distributional overlap. Global Indemnity Re’s assimilation of American Reliable furthers its diversification of risk and enhanced its underwriting expertise. Some offsetting rating factors related to the American Reliable acquisition include the significant increase in U.S. property exposures with clusters of concentration. Albeit within A.M. Best’s guidelines, financial leverage at Global Indemnity Limited rose to 26% (total debt to total capital) in 2017 with the issuance of $130 million in subordinated notes due 2047. A.M. Best believes that ongoing execution of management’s recently implemented initiatives should continue to positively impact underwriting and operating results going forward.
Positive rating actions could occur if the company can demonstrate sustainable fundamental operating results at levels that exceed that of its peers while maintaining risk-adjusted capital thresholds that are supportive of the ratings. Downward pressure on the ratings or rating outlooks could result if there is material deterioration in the organization’s risk-adjusted capital or a significant decline in underwriting and operating performance, brought on by aggregate catastrophe losses, significant unanticipated loss reserve development, a sudden shift in the group’s business strategy or the loss of a major distribution partner. Any of these events, or a combination of events, could result in negative rating pressure.
The FSR of A (Excellent) and the Long-Term ICRs of “a” have been affirmed for Global Indemnity Reinsurance Company, Ltd. and its following subsidiaries:
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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 A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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