GUILD INSURANCE LIMITED OUTLOOKS BECOME NEGATIVE FROM STABLE -- AM BEST

 KUALA LUMPUR, March 12 (Bernama) -- AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of ‘a-’ of Guild Insurance Limited (GIL) Australia.

The revision of the outlooks to negative reflects increased pressure on GIL’s balance sheet strength and operating performance fundamentals.

The ratings reflect GIL’s balance sheet strength, which AM Best assessed as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

According to a statement, the ratings factor in no rating lift or drag from the company’s 100 per cent ultimate ownership by The Pharmacy Guild of Australia.

GIL’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which AM Best expects to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio.

During fiscal-year 2020 and for the first six months this year, the company has set aside provisions for potential COVID-19 related claims arising predominantly from business interruption coverages, which remain subject to a high level of uncertainty given the ongoing legal proceedings surrounding these policy coverages in Australia.

Prospectively, AM Best expects future revisions of COVID-19 related reserves to be a key driver of both technical and operating results over the near term.

Whilst AM Best expects GIL’s operating results to benefit from planned pricing adjustments and increased operational efficiency over the medium term, investment income is expected to reduce given the low interest rate environment in Australia.

-- BERNAMA