Rating agency AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of The West of England Ship Owners Mutual Insurance Association (Luxembourg) with a stable outlook.
AM Best said that the ratings reflected WoE’s balance sheet strength (“very strong”) its “adequate operating performance”, “neutral business profile” and appropriate enterprise risk management (ERM).
The agency observed that WoE’s balance sheet strength was underpinned by risk-adjusted capitalization being maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Free reserves had grown by an annual compound rate of approximately 12% over the past five policy years (2013-2017), as a result of full retention of net surpluses. The Club’s ability to make additional calls on members provided some financial flexibility. However, AM Best noted that making such unbudgeted calls was considered to have a negative impact on the club’s business profile, with calls made only in extreme circumstances.
For the year ending February 2017, solid operating results were supported by an underwriting surplus well-above budget expectations, resulting in a combined ratio of 87.2% (2016: 83.6%).
AM Best said that it expected a small underwriting loss in the year-ending February 2018 and close-to-break even technical results in subsequent periods, in line with the Club’s performance target.
“The Club has a niche business profile insuring ship-owners and charterers against third party liability, and benefits from the membership of the International Group of P&I Clubs. WoE has a well-diversified portfolio by type of vessel and a good geographical distribution of tonnage underwritten. Continued negative pressure on premium rates is likely to offset prospective growth derived from new vessels insured”, AM Best said