AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of "bbb+" (Good) to Gar-Bo Försäkring AB (Gar-Bo) (Sweden). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Gar-Bo's balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
Gar-Bo's risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), is categorised as very strong. AM Best expects Gar-Bo's risk-adjusted capitalisation to be maintained at the very strong level over the medium term, supported by strong internal capital generation.
The company's balance sheet strength also benefits from a good liquidity profile and prudent reserving practices. A partly offsetting factor is the company's moderate reinsurance dependence, although the associated risk is mitigated somewhat by the use of a well-diversified panel of reinsurance counterparties of good credit quality. Additionally, the company's relatively high allocations to equities and non-rated bonds expose it to elevated investment risk, which increases the potential for volatility in risk-adjusted capitalisation.
Gar-Bo has a track record of strong operating performance, as evidenced by a five-year weighted average return on equity of 25% (2016-2020), as calculated by AM Best, with good contributions from both technical and investment income. In 2020, the company reported a strong combined ratio of 82% (2019: 90%), largely reflecting benign claims development in markets where it is expanding (predominantly Denmark, but also Norway).
Gar-Bo is a niche insurer in the Nordic market that underwrites construction-related long-duration and surety products, primarily in Sweden. Gross written premiums increased to SEK 317 million (EUR: 31.3 million) in 2020 from SEK 183 million (EUR 18.0 million) in the prior year. In AM Best's view, the specialist construction services that the company provides largely to mid-market construction and building clients affords a competitive advantage in its domestic market. A partly offsetting factor is heightened regulatory risk due to the company's lines of business that it offers, as well as its geographic concentration in Sweden.
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 media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.
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Contacts:
Lucio Savastano
Associate Financial Analyst
+31 20 308 5420
lucio.savastano@ambest.com
Christopher Sharkey
Manager, Public Relations
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christopher.sharkey@ambest.com
Angela Yeo
Senior Director, Analytics
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Jim Peavy
Director, Communications
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james.peavy@ambest.com
