AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "a" of Global Indemnity Reinsurance Company, Ltd. (Global Indemnity Re) (Hamilton, Bermuda) and its U.S. subsidiaries. Concurrently, AM Best has affirmed the Long-Term ICR of "bbb" of Global Indemnity Re’s ultimate parent holding company, Global Indemnity Limited (Global Indemnity) (Cayman Islands) [NASDAQ: GBLI].
Additionally, AM Best has affirmed the Long-Term Issue Credit Rating (Long-Term IR) of "bbb-" on Global Indemnity’s $100 million 7.75% subordinated notes offering due 2045, and the $130 million 7.875% subordinated note offering due 2047, as well as the indicative Long-Term IRs on its shelf registration of "bbb" on senior unsecured debt, "bbb-" on subordinated unsecured debt and "bb+" on the preferred stock. The outlook of these Credit Ratings (ratings) remains stable. (See below for a detailed listing of the companies.)
The ratings reflect Global Indemnity Re’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The balance sheet strength assessment is based on Global Indemnity Re’s Best’s Capital Adequacy Ratio (BCAR) score at the strongest level, supported by a conservative investment portfolio, conservative reserving practices and added financial flexibility through its access to the capital markets. Through its six member intercompany pool, the group targets a diverse mix of specialty niche business that is not offered generally in the standard insurance marketplace. Each company serves a specific market or distribution channel, which provides the group access to a substantial amount of commercial and personal lines business in the United States. U.S.-sourced business accounts for the largest share of the group’s revenues.
The group’s operating earnings have performed generally in line with its peers over the past five years, although catastrophe losses dampened its earnings in 2017 and 2018. The group recently made significant progress in reducing its catastrophe exposures drastically. Results for the first nine months of 2019 indicate that the group’s earnings have bounced back to historic levels. AM Best believes that the group’s continuing efforts to improve underwriting and reduce catastrophe exposure should reduce earnings volatility going forward.
Positive rating actions could occur if the company can demonstrate sustainable fundamental operating results at levels that exceed those of its peers while maintaining balance sheet strength at the strongest level. Downward pressure on the ratings or outlooks could result if there is material deterioration in the organization’s risk-adjusted capital or a significant decline in underwriting and operating performance, brought on by aggregate catastrophe losses, significant unanticipated loss reserve development, a sudden shift in the group’s business strategy or the loss of a major distribution partner.
The FSR of A (Excellent) and the Long-Term ICRs of "a" have been affirmed with stable outlooks for Global Indemnity Reinsurance Company, Ltd. and its following subsidiaries:
- American Reliable Insurance Company
- Diamond State Insurance Company
- Penn-America Insurance Company
- Penn-Patriot Insurance Company
- Penn-Star Insurance Company
- United National Insurance Company
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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