Quinn Direct has received a Baa2 financial strength rating from Moody's, with a stable outlook.
The Irish insurer's profitability (a 2005 pre-tax profit of €232m) was described as excellent by Moody's.
The rating agency indicated Quinn's business model of low-cost distribution underpinned by an innovative claims model, coupled with the absence of legacy systems and practices, makes it one of the most efficient non-life insurance operators in the Irish market.
However, Moody's highlighted three potential negatives:
• Quinn's investment portfolio contains a relatively high allocation of assets to classes which Moody's would consider as higher risk (in particular equities and property).
• The private ownership of the group (100% of the group is owned by members of the Quinn family) potentially reduces financial flexibility were additional capital to be required.
• The use of a captive reinsurance vehicle which retains additional insurance risk within the Quinn group increases potential exposure levels in an adverse experience environment.
Stephen Hunnisett, vice-president — senior analyst in Moody's European insurance team, said: "The rating level reflects Moody's view of the strong market position in Ireland and excellent profitability achieved by Quinn Direct Insurance in a relatively short space of time. Any future ratings upside would be dependent upon the ability of Quinn Direct Insurance to establish a track record of underwriting profitability across the entire cycle".
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