CORRECTED Financial Figures: Best Affirms Sunderland Marine Ratings

Ed Note: The original version of A.M. Best’s ratings report, which appeared on the IJ web site on August 17, contained an error in the financial figures, wrongly listing a £700,000 loss as £700 million. The article below is the corrected version.

A.M. Best Co. has affirmed the financial strength rating of ‘A-‘ (Excellent) and issuer credit rating of “a-” of the UK-based Sunderland Marine Mutual Insurance Company Limited (SMMI), both with stable outlooks.

Best indicated that an improvement in SMMI’s consolidated risk-adjusted capitalization is “anticipated during 2010, supported by an increase in shareholders’ funds from £43.7 million [$67.6 million] as at year-end 2009. Additionally, the company has put in place a 25 percent quota share agreement on its protection and indemnity (P&I) and hull accounts, which reduces its exposure to underwriting risk.

“SMMI is likely to report a small technical profit in 2010, following a loss of £700,000 [$1.083 million] in 2009.

In addition Best said it expects “modest rate strengthening for certain lines of business in the company’s core marine portfolio and for its aquaculture business.” This is expected to “support an improvement in underwriting performance.

“Prospective investment results are expected to be less volatile than in the past, owing to the sale of substantially all of the company’s equity holdings during 2009. In 2010, a solid net investment yield is anticipated, albeit lower than the 6% achieved in 2009 (including realized and unrealized gains).

“SMMI has a strong business profile as a specialist insurer of fishing vessels, coastal vessels and aquaculture risks. The company’s excellent knowledge of its core markets and risk management capabilities support a high level of client retention. Business is underwritten in a broad range of territories, which include the United States, the UK, continental Europe and Australasia.

Source: A.M. Best