AM Best has affirmed the A- (excellent) financial strength rating of Ecclesiastical Insurance Office plc, United Kingdom, with a stable outlook.
It said the rating reflected Ecclesiastical's excellent risk-adjusted capitalisation, improved operating performance and excellent business profile.
An offsetting factor in the rating continued to be the company's high exposure to equities, said AM Best.
The ratings agency said it believed that Ecclesiastical's risk-adjusted capitalisation was likely to be maintained at an excellent level in 2004 and 2005.
The rating recognises Ecclesiastical's improved operating performance, with the combined ratio likely to remain below 100% for the next two years, although it is expected to deteriorate from 90.7% in 2003, when claims experience was particularly benign.
AM Best expected net investment income to remain stable in 2004 following the improvement in 2003, which resulted in an unrealised gain of £19.6m, it said.
The continued high exposure to equities remains an offsetting factor, and AM Best said it believed this was unlikely to be reduced in the near future.
In 2003, equities accounted for 29% of total investments. As a result, the potential remained for volatility in future earnings, the ratings agency concluded.
