Best’s News & Research Service - July 09, 2021 02:46 PM (EDT)
AM Best Upgrades Issuer Credit Rating of GBG Insurance Limited
- July 09, 2021 02:46 PM (EDT)
London //BestWire// - AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” (Good) from “bbb” (Good) and affirmed the Financial Strength Rating (FSR) of B++ (Good) of GBG Insurance Limited (GIL) (Guernsey). The outlook of the Long-Term ICR has been revised to stable from positive, whilst the outlook of the FSR is stable. GIL is a wholly owned subsidiary of GBGI Limited, its non-operating holding company, which consolidates the GBG group.
The Credit Ratings (ratings) reflect the GBG group’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
The upgrade of the Long-Term ICR reflects the GBG group’s improved ERM practices. The group has developed an appropriate risk management framework, and its risk management capabilities are now considered commensurate with its risk profile.
The GBG group’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is expected to be maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by the retention of earnings. Partially offsetting balance sheet strength factors include the GBG group’s relatively small capital base, which increases the sensitivity of risk-adjusted capitalisation to fluctuations in capital requirements and operating losses, and the company’s moderate dependence on reinsurance. In 2020, the GBG group benefited from a USD 11.0 million capital injection by its shareholder, Elm Bidco, L.P., which was used to fund the acquisition of Clifford Allen Associates, Ltd, an independent insurance organisation dedicated to providing services to the international students of private secondary schools.
The GBG group has a track record of strong operating results, although over recent years, its performance has been affected by certain one-off expenses and non-recurring fees. Nonetheless, underlying profitability remains strong, and AM Best expects the GBG group’s technical results to return to a normalised level in the coming years. Investment results remain modest in view of the group’s conservative asset allocation.
AM Best’s assessment of the GBG group’s business profile reflects its relatively small, but growing, size and its low-risk insurance portfolio that is composed of short-tail health and life products. The group maintains good geographical diversification.
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.