A.M. Best Affirms Credit Ratings of Travelers Insurance Company Limited

A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of "a+" of Travelers Insurance Company Limited (TICL) (United Kingdom). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect TICL's balance sheet strength, which A.M. Best categorises as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management.

The ratings also reflect the support provided by the Travelers Group, the ultimate parent of which is The Travelers Companies, Inc. (Travelers). St. Paul Fire and Marine Insurance Company, a subsidiary of Travelers, provides support in the form of an explicit guarantee covering all of TICL's liabilities arising from its underwriting activities. In addition, A.M. Best believes that Travelers remains committed to TICL, which is its main underwriting operation in the United Kingdom (U.K.) and Ireland.

TICL maintains very strong risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), with a sufficient cushion to absorb higher-than-expected losses. In recent years, the negative impact of operating losses on available capital has been offset by a reduction in the level of assets pledged as funds at Lloyd's to support the underwriting of a Lloyd's syndicate managed by an affiliate.

TICL is a specialist underwriter of liability and commercial property business in the U.K. Over the past five years, the company's premium volumes have been affected by the sustained competitive conditions in its core markets and its exit from certain classes of business in response to pofitability challenges. However, A.M. Best expects gross written premium to stabilise or slightly increase in 2017, reflecting targeted rate increases and stronger new business growth.

TICL's underwriting record is weak, as demonstrated by a five-year average combined ratio of 124%. Performance has been affected negatively by a significant reduction in premium income, weather losses and reserve strengthening. In 2016 and 2017, the company has implemented a range of underwriting actions and cost saving initiatives in an effort to improve underwriting performance. These are expected to have a positive impact on operating results. Investment income is likely to remain modest, reflecting a conservative investment strategy and the prevailing low interest rate environment.

This press release relates to Credit Ratings that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases.

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