The rating actions reflect significant improvement in CBL’s capital position and risk-adjusted capitalization in 2015, due to continued strong earnings and additional capital contributions from its parent company. In addition, the initial public offering of its ultimate parent company, CBL Corporation Limited (CCL), which occurred in October 2015, has vastly improved the insurance group’s financial flexibility.

Over the past three years, CBL’s combined ratio remained very strong and consistent at about 80%; although net premium revenue on average compounded at an annual rate of over 35%. The favorable underwriting experience largely reflects the company’s growing access to a desirable book of European business.

Furthermore, the ratings reflect the financial flexibility of CCL through its access to capital markets, strong interest coverage ratio and moderate debt-to-tangible-capital ratio on a consolidated basis.

These positive rating factors are mainly offset by CBL’s limited business profile. Despite a strong and consistent underwriting performance, the company’s business profile remains somewhat geographically concentrated, as a large majority of its premium revenue is derived from Europe, primarily in France. In addition, A.M. Best remains cautious of CBL’s inherent distribution concentration risk, particularly in relation to its European business, where it relies on a limited number of underwriting agencies to generate a majority of its premium revenue.

The ratings of CBL may be subject to negative rating pressure if CBL’s capital erodes or operating performance reflects weak underwriting fundamentals that fail to meet projections. Additionally, CBL’s ratings may experience downward pressure if CCL’s financial flexibility deteriorates substantially.

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 rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.

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