AM Best Affirms Credit Ratings of Guild Insurance Limited


AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of a- of Guild Insurance Limited (GIL) (Australia). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect GILs balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

GILs balance sheet strength is underpinned by its risk-adjusted capitalization, which AM Best expects to remain at the strongest level over the medium term, as measured by Bests Capital Adequacy Ratio (BCAR). AM Best also views GIL as having a conservative investment strategy and a prudent reserving approach. While the companys underwriting portfolio includes exposure to some medium-to-long tail liability products, the company maintains a buffer in held reserves notably above the regulatory imposed minimum, and has a track record of adequate reserving. Other balance sheet factors include the companys modest absolute capital base and its limited financial flexibility given its ultimate ownership by a not-for-profit organization.

AM Best views GILs operating performance as adequate, as evidenced by a five-year average return on equity ratio of 6% (fiscal years 2014 to 2018). GILs combined ratio historically has been maintained at approximately 100%, reflecting a favorable loss ratio albeit offset by an elevated expense ratio when compared with the industry average. Overall earnings in the past five years remain supported by robust and generally stable investment returns.

GILs business profile is viewed as neutral. While the company is a small insurer in Australias non-life sector, with a market share of gross premiums below 1% in 2018, GIL is a leading provider of insurance protection to allied health professional associations. The companys presence in this segment is supported by its direct access to members of its parent; The Pharmacy Guild of Australia, a national employers organization representing community pharmacies across Australia.

The companys ERM is viewed as appropriate given the size and complexity of GILs operations.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM Bests 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 Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and AM Best Rating Action Press Releases.

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Yi Ding
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