AM Best has affirmed the A- (excellent) insurer financial strength rating and stable outlook of Markel International Insurance Company Ltd United Kingdom (MIICL).
It said the rating reflected MIICL's strategic importance to its parent company, increased pressure on its risk-adjusted capitalisation derived from premium growth and improved operating performance.
An offsetting factor in the rating continued to be the uncertainty relating to reserving levels for US casualty business, said AM Best.
AM Best said it deemed MIICL to be strategically important to Markel North America Insurance Group. Consolidated net written premium was forecast to grow by 35% at year-end 2004. Approximately $150m of business was likely to be transferred from Lloyd's Syndicate 3000 to MIICL to take advantage of the company's lower cost base, which would increase MIICL's underwriting risk.
But it said it believed that the effect of this on the company's risk-adjusted capitalisation would be largely offset by anticipated profit retention.
AM Best also 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.
There was still some uncertainty relating to the company's reserves for US casualty business written between 1997-2001 and asbestos-related claims, said the company.
However, AM Best said it believed any further deterioration in 2004 was likely to be considerably less than the $10m charged in the first quarter of 2004.
