AM Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” (Good) to Casualty & General Insurance Company (Europe) Limited (CGICE) (Gibraltar). The entity is a subsidiary of CG Holdings (Gibraltar) Limited (CGH), the non-operating holding company of the group. The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings of CGICE reflect its strategic importance to the group, and CGH’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

CGH’s balance sheet strength assessment is underpinned by its consolidated risk-adjusted capitalisation, which was at the strongest level at year-end 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). The group’s balance sheet strength assessment considers CGH’s good internal capital generation and low underwriting leverage. An offsetting factor to the balance sheet strength assessment is CGH’s high dependence on reinsurance, with just over 75% of premium ceded at year-end 2023, 52% of which was ceded to an affiliated company. The associated credit risk is partially mitigated through the requirement for funds withheld. Moreover, this exposure to a single counterparty is expected to decrease over the short term.

CGH has a track record of good operating performance metrics, demonstrated by a five-year (2019-2023) weighted average combined operating ratio of 76.5% (as calculated by AM Best). With the shift in the business mix toward short-tail insurance business, loss ratios are expected to remain in line with recent averages; however, sustained profitability during this growth phase will be demonstrated ultimately over time. Investment income supports overall earnings with a positive, albeit limited, contribution from investments mainly held as cash and structured deposits, evidenced by a five-year weighted average investment yield of 1.1%.

Through its primary insurance vehicle, CGICE, the group is licensed to write a variety of insurance products, with a focus on the UK pet line of business (76% of year-end 2023 gross written premium [GWP]). With GBP 57.5 million of GWP in 2023, CGH’s profile is relatively small, with business is concentrated primarily in the competitive UK insurance market. The group’s ambitious business plans show future premium growth driven by the continued development of its pet insurance business, as well as its entry into UK home insurance.

The group’s ERM framework is considered to be appropriate for its risk profile. CGH has developed a robust approach to risk identification, quantification and mitigation across its operations and has appropriate third-party functions in place for operational support.

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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