AM Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb” (Good) of Irwell Insurance Company Limited (Irwell) (United Kingdom). The outlook of the FSR is stable.

The Credit Ratings (ratings) reflect Irwell’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The positive outlook on the Long-Term ICR reflects improvement in Irwell’s balance sheet strength and operating performance fundamentals over recent years. AM Best expects that the company's earnings will continue to grow sustainably over the medium term, translating in solid internal capital generation, sufficient to support its high growth strategic plan.

Irwell’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), at financial year-end 31 March 2024 (FY24). The assessment considers Irwell’s high-quality asset base and moderate dependence on reinsurance used to support new risks with high limits relative to its capital base. A partially offsetting rating factor is the company’s relatively small capital base (capital and surplus of GBP 33 million for FY24), which exposes its risk-adjusted capitalisation to potential volatility.

Irwell has a track record of positive operating performance, reporting a five-year (FY20-24) weighted average return on equity ratio of 13%. Underwriting profits are the main driver of earnings, with the company reporting a five-year weighted average combined ratio of 85%. The close relationship with the Peninsula Business Services Group Ltd (PBSG), a group of service companies that distribute its products and is owned by Irwell’s ultimate shareholders, enables Irwell to benefit from good quality business, with the company adapting its profitability through pricing and commission arrangements. Operating earnings have been supplemented by modest investment results, reflecting the company’s conservative asset base.

Irwell benefits from a niche position as a provider of legal expenses insurance to clients of PBSG companies, which provide advice on human resources, tax investigation and health and safety services in the United Kingdom. In addition, the company writes general liability business through coverholders. AM Best expects the company’s portfolio to grow over the medium term, supported by the material expansion of its liability business.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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