AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Motors Insurance Company Limited (MICL) (United Kingdom). The outlook of these Credit Ratings (ratings) is stable. MICL is a wholly owned subsidiary of AmTrust International Insurance, Ltd., which is a member of the AmTrust Group.

The ratings reflect MICL’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

MICL’s balance sheet strength is underpinned by risk-adjusted capitalisation comfortably at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and is supported by prudent reserving practices and a low-risk investment portfolio. Over the medium term, AM Best expects the buffers in risk-adjusted capitalisation, in excess of the strongest threshold, to reduce moderately as the company upstreams excess capital through dividend payments to the AmTrust Group. MICL’s moderate dependence on reinsurance and concentration to one reinsurance counterparty is partially mitigated by that counterparty’s excellent credit quality.

MICL has a track record of strong operating performance, with a five-year (2020-2024) weighted average return-on-equity ratio of 10.6%. The company’s earnings are underpinned by solid underwriting profits over the cycle, demonstrated by a five-year weighted average combined ratio of 91.2%, as calculated by AM Best, which was driven by prudent pricing and profit-sharing arrangements. In addition, the company’s overall earnings are supported by modest investment returns from its conservative asset allocation.

MICL provides auto warranty and auto add-on policies, primarily distributed by retail intermediaries. The company has a well-established competitive position in the auto warranty market in the United Kingdom, which generates the majority of its revenue. AM Best expects MICL’s market profile to remain relatively stable.

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