Guild Insurance retains stable ratings
Guild Insurance retains stable ratings | Insurance Business Australia
Insurance News
Guild Insurance retains stable ratings
Agency delved into factors affecting company’s credit ratings
Insurance News
By
Roxanne Libatique
Credit rating agency AM Best has reaffirmed the financial strength rating of Guild Insurance Limited (GIL) at A- (Excellent), with a matching long-term issuer credit rating of “a-” (Excellent).
Both ratings maintain a stable outlook.
What are the factors that affected Guild Insurance’s credit ratings?
According to AM Best, these ratings are based on a comprehensive evaluation of GIL’s balance sheet, which AM Best characterises as very strong. The assessment also recognises adequate operating performance, a neutral business profile, and suitable enterprise risk management.
Additionally, AM Best factored in the neutral influence of The Pharmacy Guild of Australia (PGOA), the company’s parent.
Guild Insurance’s balance sheet
The credit rating agency said GIL’s robust balance sheet is reinforced by strong risk-adjusted capitalisation, measured using Best’s Capital Adequacy Ratio (BCAR), which reached its highest level as of June 30, 2023.
Although GIL’s ownership by a not-for-profit entity limits financial flexibility, the company’s prudent capital management maintains strong solvency and risk-adjusted capitalisation.
Despite the potential for uncertainty stemming from exposure to medium- and long-tail liability insurance, GIL uses conservative reserving practices to hold additional reserves above minimum regulatory requirements.
Guild Insurance’s operating performance
The operating performance of GIL is regarded as adequate, with an average return-on-equity ratio of 4.7% between fiscal years 2019 and 2023. Although this period saw increased volatility due to COVID-19 provisions, adverse weather, and market fluctuations, GIL’s expense ratio improved through better operational scale and cost-control initiatives.
AM Best expects GIL to maintain adequate profitability through technical gains and investment returns.
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