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BEST'S CREDIT RATING ACTION

Best’s News & Research Service - July 21, 2022 11:43 AM (EDT)

AM Best Affirms Credit Ratings of GBG Insurance Limited

  • July 21, 2022 11:43 AM (EDT)

London //BestWire// - AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of GBG Insurance Limited (GIL) (Guernsey). The outlook of these Credit Ratings (ratings) is stable. GIL is a wholly owned subsidiary of GBGI Limited, its non-operating holding company, which consolidates the GBG group.

The ratings reflect the GBG group’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The GBG group’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is expected to be maintained comfortably at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The GBG group’s consolidated capital position has strengthened significantly over recent years, reflecting several capital injections from its shareholder, Elm Bidco, L.P. The increase in the size of the group’s capital base, together with the concurrent improvement in its capital management capabilities, has helped to reduce the sensitivity of risk-adjusted capitalisation to fluctuations in capital requirements and operating losses. Offsetting rating factors include relatively high levels of intangibles on the group’s balance sheet and moderate dependence on reinsurance, partially mitigated by the excellent credit quality of the reinsurance panel.

AM Best considers the GBG group’s operating performance to be adequate, with post-tax profits ranging to USD 3.6 million from USD -3.2 million over the past five years. Over that period, performance has been affected by several one-off expenses and non-recurring fees. In addition, COVID-19-related claims contributed to an underwriting loss for the group in 2021. Nonetheless, AM Best expects technical results to remain adequate with the potential to benefit from a planned return to top-line growth in the coming years. Investment results remain modest due to the group’s conservative asset allocation.

AM Best’s assessment of the GBG group’s business profile as limited reflects its relatively small, but growing, size and its low-risk insurance portfolio that is composed primarily of short-tail health, travel and life products. The group focuses on a niche market of globally mobile persons (expatriates, travellers, students, and high net worth individuals) and 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 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.



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