A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) of Markel International Insurance Company Ltd (MIICL) and says the outlook remains stable.
The rating reflects MIICL's strategic importance to its parent, increased pressure on its risk-adjusted capitalisation derived from premium growth and improved operating performance. However, an offsetting factor continues to be the uncertainty relating to reserving levels for United States casualty business.
A.M. Best says it believes MIICL to be strategically important to Markel North America Insurance Group. Consolidated net premium written is forecast to grow by 35% at year-end 2004 (approximately $150m of business is likely to be transferred from Lloyd's Syndicate 3000 to MIICL to take advantage of the company's lower cost base), which will increase MIICL's underwriting risk. But A.M. Best believes that the effect of this on the company's risk-adjusted capitalisation will be largely offset by anticipated profit retention.
At the same time, A.M. Best expects the consolidated combined ratio to improve to approximately 105% (compared with 111.4% in 2003), supported by improved underwriting discipline and the maintenance of adequate rates in its core market segments.
