A.M. Best has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of ECIC saying the outlook for both ratings remains stable.
Roger Brown, Managing Director of ECIC said: “I am delighted to today announce that A.M. Best has affirmed its A- (Excellent) rating for ECIC. The last 12 months has seen strong growth for the business and, with new key appointments and the development of new products for contractors in specialist building services trades, I am looking forward to seeing that growth continue.”
A.M. Best Europe said ECIC’s risk-adjusted capitalisation is likely to remain excellent in 2012 and into 2013 in spite of a payment to be made in the second half of 2012 of an exceptional dividend of GBP 6 million. This payment is to help ECIC’s parent, the trade organisation The Electrical Contractors’ Association, meet cash calls in relation to a loss-making Lloyd’s syndicate, the interest in which has now been sold.
An offsetting rating factor is ECIC’s high reliance on third-party reinsurance, particularly quota share agreements, with the company having ceded approximately 40% of gross premiums written in 2011 (2010: 50%). However, this proportion is expected to reduce further in 2012, with subsequent reductions likely to take it to nearly 25% in 2014, thereby diminishing ECIC’s exposure to increased reinsurance rates and credit risk.
A.M. Best said that despite challenging market conditions in the United Kingdom, a good underwriting performance is anticipated for ECIC in 2012, with a combined ratio between 40% and 45%. ECIC has a strong underwriting record, which is underpinned by an excellent knowledge of its core market. In 2011, the company produced an exceptional combined ratio of 15%, due to a negative loss ratio since the decrease in net claims reserves was marginally greater than the amount of net claims paid. ECIC’s investment performance is less volatile than in the past after reallocations of a proportion of investments from equities to high quality fixed income securities during 2010 and 2011 and improved oversight of investment managers’ performance.
