Latest ratings news from AM Best;
AM Best has downgraded the Financial Strength Rating to B (Fair) from B+ (Good) and the Long-Term Issuer Credit Rating to “bb+” (Fair) from “bbb-” (Good) of Universal Insurance Company (Guernsey) Limited (UIC) (Guernsey). Concurrently, AM Best has placed these Credit Ratings (ratings) under review with negative implications.
The rating downgrades follow the payment by UIC of a GBP 8 million exceptional dividend to its ultimate parent, Universal Holdings (Guernsey) Limited (UHL), on 14 July 2022. This dividend payment led to a material depletion of UIC’s capital base, as it amounted to close to 80% of the company’s shareholders’ equity of GBP 10 million as at 30 June 2022. The dividend paid is intended to be used to finance the creation of a new risk carrier in Gibraltar, under the form of a protected cell company, as the UHL group undergoes a restructuring.
The ratings reflect UIC’s balance sheet strength, which AM Best assesses as adequate, as well as its strong operating performance, very limited business profile and marginal enterprise risk management.
The ratings have been placed under review with negative implications as AM Best needs to fully assess the impact of the UHL group’s restructuring on UIC’s business model and credit fundamentals.