A.M. Best has assigned a Financial Strength Rating (FSR) of B (Fair) and a Long-Term Issuer Credit Rating (Long-Term ICR) of "bb+" to Folgate Insurance Company Limited (Folgate) (United Kingdom). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Folgate's balance sheet strength, which A.M. 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). 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, has secured a co-insurance agreement with a Lloyd's syndicate to support its capacity. According to the agreement, starting in 2019, Folgate will accept 30% of APC's U.K. risks, with the remainder placed with the syndicate. The insurer expects gross written premiums of approximately GBP 8 million in 2019.
Folgate's balance sheet strength is underpinned by projected risk-adjusted capitalisation at the very strong level, as measured by the Best's Capital Adequacy Ratio (BCAR) as of year-end 2019. 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. In addition, Folgate's risk-adjusted capitalisation is exposed to potential volatility in stressed scenarios, due to its small capital base.
A.M. Best expects the insurer's underwriting portfolio to be highly concentrated by product and geography, dominated by U.K. commercial lines insurance. In addition, A.M. 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 are expected to benefit Folgate's business profile.
Based on the performance of the business underwritten by APC, A.M. Best expects Folgate's underwriting results to be positive. Folgate will be managed by APC, whose commissions will make up most of the insurer's operational expenses. Operating performance is expected to benefit from modest investment income.
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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Contacts:
Yevgine Asatryan
Financial Analyst
+44 20 7397 0316
yevgine.asatryan@ambest.com
Mathilde Jakobsen
Director, Analytics
+44 20 7397 0266
mathilde.jakobsen@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com