ENP Newswire -
Release date- 03072014 -
The outlook for all ratings remains stable.
The ratings of LGI reflect its track record of strong underwriting performance, good risk-adjusted capitalisation and established business profile within its core markets. LGL's ratings reflect its strong risk-adjusted capitalisation and strategic importance to LGI.
LGI has a track record of strong underwriting performance, which has been achieved despite the challenging economic conditions in
LGI's shareholders' funds fell during 2013 due to the payment in January of a final dividend relating to 2012 performance. In spite of this, risk-adjusted capitalisation remained at a good level. Going forward, capitalisation is expected to remain supportive of the ratings, with higher retained earnings partially offsetting an anticipated increase in underwriting risk. Premium income is expected to grow as economic conditions improve across the company's core markets.
Together, LGI and LGL have an established specialist profile across Europe. The companies share a creditor client base, with LGI's underwriting portfolio also including extended warranty and accidental damage insurance. LGL is strategically important to LGI, as it enables long-term creditor life and permanent HEALTH INSURANCE to be underwritten. A partially offsetting rating factor is LGI's highly concentrated customer base, with its five largest clients accounting for approximately 50% of net written premiums. However, this concentration risk is partly mitigated by the company's long-standing client relationships and its comprehensive service and claims handling expertise, which cannot be easily substituted.
Positive rating actions on LGI and LGL are unlikely in the short to medium term. Negative rating actions may be driven by a significant decline in risk-adjusted capitalisation or unexpected poor operating performance. LGL's ratings may also be subject to negative rating pressure if the company's strategic importance to LGI was to diminish.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures:A.
This rating announcement has been issued by A.M. Best Europe - Rating Services Limited, which is a subsidiary of
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