Rating agency AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to West of England Ship Owners Mutual Insurance Association (“West”) (Luxembourg). The outlook is stable.
AM Best said that the ratings reflected West’s balance sheet strength, which AM Best assessed to be very strong, as well as its “adequate operating performance, neutral business profile and appropriate enterprise risk management”.
The agency said that West’s balance sheet strength assessment was underpinned by risk-adjusted capitalization at the strongest level at year-end February 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). The Club’s balance sheet strength assessment was also supported by a prudent reserving approach and good liquidity.
AM Best said that, following a period of underperformance, West’s underwriting results improved for year-end February 2023, resulting in a combined ratio of 97% (prior year: 114%), as calculated by AM Best. The improvement in results followed actions taken by management, including applying general rate increases for P&I business and de-risking the portfolio.
AM Best expected the Club’s prospective technical performance to be supportive of the adequate assessment, despite being subject to volatility due to large claims exposure.
It was noted that the Club’s non-technical performance was also subject to volatility as all unrealized gains and losses are accounted for through profit and loss. For year-end February 2023 West reported an overall loss after tax of $20m, due to unrealised investment losses.
West’s gross written premium increased by 10% for the year-ending February 2023 to $296m, primarily reflecting the Club’s general rate increases for its P&I members.
Tom Bowsher, Group CEO of West P&I, said that “there has been a material improvement in West’s technical performance since 20 February 2021 as we continue to strengthen the capital position of the Club and maintain our upward trajectory. We are delighted that this positive progress has been independently recognised by AM Best following a rigorous rating review process that considers both past and prospective performance”.
Bowsher added that “Members’ own claims performance for Policy Year 2023 is better than the last three Policy Years and the Club’s Pool share is the lowest it has been since 2015. This, and a more favourable investment environment, means that the Club’s capital is continuing its improving trend.”
West’s solvency coverage increased to 176% at 20 February 2023 and the Club writes gross premium of about $320m across its diversified portfolio of marine risks.