Navigators new unit secures ‘A’ rating but S&P warns on dangers of Brexit
Navigators Group’s new international unit, Navigators International Insurance (NIIC), has secured a financial strength rating of ‘A’ from S&P Global Ratings, which cited the 20-year track record of its parent company. The outlook on the rating is stable.
“Although NIIC will be a new company within the group, Navigators has been writing business in the UK and European Economic Area (EEA) for over 20 years. NIIC will write business in lines in which it has an established track record and in markets where the Navigators name is known,” S&P said.
It added: “The management and underwriting teams are made up largely of current Navigators professionals who have conducted business in the targeted regions. NIIC will provide Navigators the capacity to expand its business in EEA countries where Navigators did not previously have a registered corporate insurer.”
S&P said its ratings on Navigators reflect its view of the group's strong business risk profile and very strong financial risk profile, built on its strong competitive position and very strong capital and earnings.
“Under our criteria, these lead to a possible anchor of either 'a+' or 'a'; we assigned the latter based on the company's expanding risk position, expansion focus, and relatively narrow competitive position,” it said.
“The stable outlook reflects our view that Navigators will continue generating profitable operating results as it expands its underwriting and that its risk profile will not change materially. We expect capital adequacy to remain redundant at the very strong level.”
But it did also issue two warnings. It said it may lower the ratings in the next 24 months if Navigators' operating performance deteriorates below peers' or if earnings volatility increases as a result of growth in business.
And it warned the changing relationship between the UK and the EU may also influence things. “We could reevaluate the core status of NIIC should the post-Brexit relationship between the U.K. and European Union limit NIIC's ability to conduct business,” S&P said.
