Travel & General Insurance Company downgraded to 'BBB-'
Fitch Ratings has downgraded Travel & General Insurance Company plc's (TGIC) insurer financial strength rating from BBB to 'BBB-' with a negative outlook.
Fitch said the downgrade reflected the travel bond insurer's poor operating performance and a reported net loss of £480,000 last year end 2009, down from a profit of £860,000 in 2008. The loss reduced shareholders' equity to £5.9m at October 2009, down 7.6% from the previous year, through a decrease in retained earnings.
According to Fitch, the company's operating performance remains challenged by a combination of its expansion into less profitable and more volatile travel insurance business together with the impact of the economic downturn, which has contributed to losses for both of TGIC's main business lines during the 2009 financial year.
TGIC made a technical loss of £850,000 on its travel insurance business in 2009, up from £500,000 in 2008.
Fitch’s statement said: “The company has a prudent approach to risk management, but is subject to the risks facing small niche companies, including dependence on a relatively small number of key staff and constrained financial flexibility. The negative outlook reflects the challenge faced by TGIC in restoring its business to profitability given the currently challenging operating environment.”
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