S&P affirms Britannia P&I’s ratings as stable

Aug 11 2017

S&P Global Ratings, the world’s leading independent credit ratings provider, has affirmed its ‘A’ long-term financial strength (‘AAA’ capital) and counterparty credit ratings on the Britannia P&I Club.

The ratings agency said that the outlook remains stable based on the expectation that Britannia's capital adequacy will remain at a level consistent with S&P’s 'AAA' benchmark.

The Club’s stronger balance sheet also led it to revise its assessment of Britannia's liquidity from ‘strong’ to ‘exceptional.’

In a statement, S&P said that strong earnings in February, 2017 improved Britannia's balance sheet liquidity and its view of the club’s capital adequacy under S&P’s capital model, adding that “Britannia’s very strong net combined ratio of 71% in the financial year ending 20^th February, 2017 exceeded our expectations.”

Commenting on the news, Andrew Cutler, CEO of the Club’s managers, said the rating reflected Britannia’s financial strength, which was to the benefit of its members. “This financial strength has enabled us to return $30.8 mill to our members over the past nine months, having redistributed $20 mill worth of surplus capital in May of this year and waived deferred calls to the tune of $10.8 mill in October last year.”

S&P said that significantly lower than expected costs on large claims and a light experience on the pool contributed to the performance. The combined ratio benefited from $75 mill of reserve releases in 2017, which was largely in line with past years' improvements in reserves, it added.

In its report S&P said that, following a $20 mill capital distribution announcement for the first time in May, 2017, it projected comparable distributions annually for the next three years. “We think that future distributions will be fully supported by profit generation and will have a fairly neutral impact on the existing capital cushion that supports our view of Britannia's capital strength.”

“Britannia has good access to potential sources of liquidity, mainly premium income and an asset portfolio that contained about $1.2 bill in cash and high quality marketable securities as of February, 2017. There is no debt to be repaid over the next 12 months and we consider the company capable of managing unexpectedly large claims relatively quickly,” it said.