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A.M. Best Affirms Ratings of London General Insurance Company Limited and London General Life Company Limited

July 4, 2014



ENP Newswire - 04 July 2014

Release date- 03072014 - A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of 'a-' of London General Insurance Company Limited (LGI) and London General Life Company Limited (LGL) (both domiciled in the United Kingdom).

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 Europe that have driven down consumer spending and demand for warranty and creditor products. LGI reported a technical profit of GBP 8.9 million in 2013, compared with GBP 11.5 million in 2012.

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 A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures:A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

This rating announcement has been issued by A.M. Best Europe - Rating Services Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

A.M. Best's credit ratings are independent and objective opinions, not statements of fact. A.M. Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. A.M. Best's credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

A.M. Best receives compensation for interactive rating services provided to organizations that it rates. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services. For more information regarding A.M. Best's rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the A.M. Best Code of Conduct.

A.M. Best - Europe Rating Services Limited (AMBERS), a subsidiary of A.M. Best Company, is an External Credit Assessment Institutions (ECAI) in the European Union (EU). Therefore, credit ratings issued by AMBERS may be used for regulatory purposes in the EU as per Directive 2006/48/EC.


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Source: ENP Newswire


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