A.M. Best Europe - Rating Services Limited, a subsidiary of
A.M. Best Company, reiterated the financial strength rating (FSR)
of A (Excellent) and issuer credit rating (ICR) of "a+" of
Travelers Insurance Company Limited (TICL), a subsidiary of
The Travelers Companies, Inc.
). The ratings outlook is stable.
TICL is Travelers' primary underwriter in the United Kingdom and
Ireland and holds a dominant position as liability and commercial
property underwriter in UK. Alongside, it benefits from the brand
name of its parent company.
TICL, in 2011, experienced a 13% decline in its gross written
premiums subsequent to the discontinuation of the personal lines
business in Ireland. A. M. Best estimates it to decrease 5% in
2012. Though the rating agency noted rate increases in UK
commercial businesses, it believes growth will be limited by the
competitive macro environment.
The rating agency estimates TICL's 2012 pre-tax earnings to be
less than the 2011 level. The lower earnings are expected to be
induced by lower investment earnings. However, it expects
technical performance to improve from the prior-year reserve
releases, though lower than the 2011 level. Nevertheless, A.M.
Best projects an underwriting loss and elevation in expense
ratio. This is expected to stem from lower premium due to the
exit from personal lines business in Ireland and increase in
operating costs attributable to infrastructure investments. The
rating agency anticipates improved investment income to write off
the underwriting loss.
Rating affirmations or upgrades from credit rating agencies play
an important part in retaining investor confidence in the stock
as well as maintaining creditworthiness in the market. We believe
the company's strong score with the credit rating agencies will
help it write more business going forward.
The rating agency stated that though positive revisions are less
likely in the short term, the ratings will be subject to
downgrade if operating results deteriorate, capital erodes or
support from the parent company weakens.
Travelers carries a Zacks #3 Rank implying a short-term Hold
The Hartford Financial Services Group, Inc.
W.R. Berkley Corporation
), which closely compete with Travelers, share the same Zacks
HARTFORD FIN SV (HIG): Free Stock Analysis
TRAVELERS COS (TRV): Free Stock Analysis
BERKLEY (WR) CP (WRB): Free Stock Analysis
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