KUALA LUMPUR, April 11 (Bernama) -- Global credit rating agency, AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of ‘a-’ (Excellent) of Guild Insurance Limited (GIL) Australia.
These Credit Ratings (ratings) reflect GIL’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. In addition, the ratings factor in no rating lift or drag from the company’s ultimate ownership by The Pharmacy Guild of Australia (PGOA).
The revision of the outlooks to stable reflects an improvement in GIL’s balance sheet strength and operating performance fundamentals, following increased certainty over GIL’s exposure to COVID-19 related business interruption (BI) claims, which has allowed the company to release provisions.
GIL’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which was at the strongest level in fiscal year-end 2021 (June 30, 2021), as measured by Best’s Capital Adequacy Ratio (BCAR).
Capital adequacy in recent years has been supported by GIL’s capital management actions, including increased reinsurance utilisation and a capital injection from its parent group, PGOA, during fiscal year 2021.
GIL has held provisions for potential COVID-19 related claims over the past two fiscal years arising predominantly from BI coverages, with the final cost subject to a high level of uncertainty.
According to a statement, AM Best views GIL’s operating performance as adequate, with an average return-on-equity ratio (after tax) of 1.8 per cent (fiscal years 2017-2021).
Whilst the company’s operating performance exhibited a deteriorating trend in fiscal year 2020 and 2021, primarily driven by COVID-19 related provisions, GIL’s underwriting profit and net income are expected to benefit from a significant reduction in these provisions during fiscal year 2022.
For more information, visit www.ambest.com.
-- BERNAMA
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