AM Best

AM Best Affirms Credit Ratings of Premier Insurance Company Limited

 Emily Thompson
Financial Analyst
+44 20 7397 0291

Valeria Ermakova
Associate Director, Analytics
+44 20 7397 0269

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


LONDON - SEPTEMBER 24, 2020 12:22 PM (EDT)
AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Premier Insurance Company Limited (Gibraltar). The outlook of these Credit Ratings (ratings) is stable. 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 categorises as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

Premier successfully navigates the fiercely competitive U.K. motor market through its proven business strategy, targeting a niche segment within the crowded market. The company is small and concentrated by product offering and geography. However, in 2019, Premier reported a 40% growth in revenue following the addition of business already managed by an affiliated company. AM Best expects the company to generate modest growth over the near term supported by its long-term relationships with its distribution partners.

Premier’s balance sheet strength is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best Capital Adequacy Ratio (BCAR), which has been supported by internal capital generation through the retention of earnings over time. The company’s conservative investment and reserve management provide stability to its financial strength. An offsetting factor in Premier’s balance sheet strength assessment is the potential for volatility in risk-adjusted capitalisation due to its small absolute capital base, and the company’s dependence on reinsurance.

Premier’s focus on bottom line profitability is evidenced by profits reported in each of the past five years, and a five-year (2015-2019) weighted average return-on-equity of 9.0%. Historically good underwriting results have been observed despite a highly competitive pricing environment, with the company posting a five-year weighted average (2015-2019) combined ratio of 85.7%. However, results can be volatile due to the small topline. This was demonstrated in 2019 when the company reported a combined ratio in excess of 100% due to the poor performance of one book of business and lower than expected earned premiums. Underwriting profitability has returned in 2020 to date, helped by Premier’s proactive and formalised approach to risk management, as well as its prudent reserving practices. In addition, the company has benefitted from reduced claims frequency owing to COVID-19 driven lockdown measures.

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 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 credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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