Canadian Underwriter

A.M. Best affirms ratings of Gerling primary cos. (January 07, 2003)

January 7, 2003   by Canadian Underwriter

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Rating agency A.M. Best has affirmed its “A- (excellent)” financial rating of Gerling-Konzern Allgemeine Versicherungs AG (GKA) and its primary insurance subsidiaries of Gerling Canada Insurance Co. and Gerling America Insurance Co.
A.M. Best cites Gerling’s leading position in industrial insurance coverage coupled with the groups recently announced restructuring plans as the prime strengths of the group. The rating agency believes that Gerling can benefit from the current capacity shortage in the specialist industrial insurance marketplace, while at the same time maximizing on profitability through its strong risk management capabilities. The group is also in the process of diversifying its portfolio to include general commercial and personal lines. “A.M. Best expects a moderate [group] premium growth of approximately 3% to 3.1 billion in 2002A.M. Best expects a combined ratio of approximately 104% in 2002A.M. Best will closely monitor GKA’s ability to achieve a combined ratio of below 100% in 2003.”
The rating agency expects that Gerling’s restructuring plans will see a reduction in the in its relatively high expense ratio, whilst also ensuring adequate growth capital. “A.M. Best does not anticipate additional capital needs in the next two years based on GKA’s business plans, and it expects a further strengthening of the company’s equity base from retained profits in 2002 and 2003.” Furthermore, A.M. Best does not believe that the Gerling group’s net risk retention will increase as a result of withdrawal of reinsurance protection by Gerling Re. “The continued uncertainties regarding future ownership of the Gerling group are not expected to have a negative impact on GKA’s business profile.”

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