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AM Best Affirms Credit Ratings of Folgate Insurance Company LimitedAM Best has affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) of "bb+" of Folgate Insurance Company Limited (Folgate) (United Kingdom). The outlook of these Credit Ratings (ratings) is stable. The ratings reflect Folgate's balance sheet strength, which AM Best categorises as adequate, as well as its adequate operating performance, very limited business profile and appropriate enterprise risk management. Folgate was acquired by its parent, Anglo London Limited (ALL), in 2014, and re-commenced active underwriting in September 2015, writing quota-share reinsurance for business sourced by an affiliated company, Anglo Pacific Consultants (London) Limited (APC (News - Alert)). APC is a managing general agent specialising in commercial lines insurance for small and medium-sized businesses. In 2018, Folgate received an insurance licence, and as part of its new business model, secured a co-insurance agreement with a Lloyd's syndicate to support its capacity. According to the agreement, effective from January 2019, Folgate accepts 30% of APC's risks, with the remainder placed with the Lloyd's syndicate. Folgate expects gross written premiums of approximately GBP 7.5 million in 2019. Folgate's balance sheet strength is underpinned by risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), which is expected to remain at least at the very strong level. However, risk-adjusted capitalisation is exposed to potential volatility in stressed scenarios, due to its small capital base. The impact from ALL on balance sheet strength is assessed as negative, due to its inadequate consolidated BCAR scores, high financial leverage and limited financial flexibility. The insurer's underwriting portfolio is highly concenrated by product and geography and is dominated by U.K. commercial lines insurance. In addition, AM Best views Folgate's position in the competitive U.K. market as vulnerable and highly dependent on third parties. This is partly mitigated by APC's underwriting expertise and existing broker relationships, which benefit Folgate's business profile. AM Best expects Folgate's underwriting results to be positive for 2019, based on a reported technical profit of GBP 0.5 million for the first nine months of the year. Folgate is managed by APC, whose commissions make up most of the insurer's operational expenses. Prospective operating performance is expected to benefit from modest investment income. This press release relates to Credit Ratings that have been published on AM 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 AM 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 AM Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases. AM Best is a global credit rating agency, news publisher and data provider specialising in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com. Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED. View source version on businesswire.com: https://www.businesswire.com/news/home/20191121005689/en/ |
