The Credit Ratings (ratings) reflect GIL’s strong risk-adjusted capitalization, good operating performance and established business profile in Australia’s allied health sector. The ratings also acknowledge GIL’s prudent reserving practices, robust reinsurance program and high-quality investment portfolio.

Partially offsetting rating factors include the company’s relatively high and volatile combined ratio, as compared with both the industry and GIL’s own internal operating target. Even though the company has a track record of positive operating results, overall earnings in recent years largely have been driven by investment income rather than underwriting profits.

The revision of the outlooks to stable from positive reflects A.M. Best’s view that, in the short term, GIL’s competitive position and underwriting results will remain under pressure due to the current extremely competitive market conditions.

A.M. Best remains concerned over GIL’s strategic and business expansion risks in the commercial space. Due to the challenging operating environment in recent years, premium growth has been constrained and is lower than the company’s forecasts. As a result, the anticipated reduction in its expense ratio has not materialized. Moreover, the company has been experiencing poor technical performance in its industrial specialty risk portfolio. A.M. Best notes that, in response, the company has taken on a less expansionary stance, as well as a targeted focus on strategic and remedial actions to improve its underwriting profitability.

Whilst GIL is well-positioned at the current rating level, negative rating actions could occur if there is significant deterioration in GIL’s risk-adjusted capitalization, accompanied by a downward trend in underwriting results.

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 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.