Best’s News & Research Service - November 12, 2020 10:48 AM (EST)
AM Best Affirms Credit Ratings of Irwell Insurance Company Limited
- November 12, 2020 10:48 AM (EST)
London //BestWire// - AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Irwell Insurance Company Limited (Irwell) (United Kingdom). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Irwell’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.
Irwell’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), for financial year-end 31 March 2020 (YE20). Irwell has a high quality asset base and very strong liquidity position, highlighted by liquid assets covering insurance reserves by 142% at YE20. An offsetting factor is the company’s small capital base (capital and surplus of GBP 22 million at YE20), which can give rise to fluctuations in its risk-adjusted capitalisation.
Irwell has a good, albeit volatile, operating performance, demonstrated by a five-year (2016-2020) weighted average return on equity of 9%. Underwriting profits are the main driver of earnings, with the company reporting a five-year (2016-2020) weighted average combined ratio of 94%. Irwell’s close relationship with the Peninsula Business Group Ltd (PBSG), a group of insurance intermediaries that have common shareholders, supports its ability to control profitability through pricing and commission arrangements. Operating earnings are supported by modest but relatively stable investment results, reflecting the company’s conservative investment allocation.
Irwell benefits from a niche position as a provider of legal expenses and general liability insurance to clients of companies operating within PBSG that provide advice on human resources, tax investigation and health and safety services in the United Kingdom. As a consequence of its specialist focus, it is materially exposed to legislative changes related to the UK’s employment and tax laws.
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 specialising 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.