AM Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit ratings of “a-” (Excellent) of Bermudian-based Through Transport Mutual Insurance Association Limited (TTB) and its UK-based subsidiary, TT Club Mutual Insurance Limited (TTI).

TTB and TTI collectively trade as TT Club.

The outlook of these credit ratings is stable.

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

The ratings of TTI reflect its strategic importance to TTB as the source of the majority of the group’s insurance business and the support that it receives from TTB in the form of comprehensive reinsurance protection.

TTB’s balance sheet strength is underpinned by its consolidated risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, which is well in excess of the minimum required for a strongest assessment.

The balance sheet strength also benefits from prudent reserving practices, which have resulted in a track record of favourable reserve development and a relatively conservative investment strategy.

AM Best views TTB’s dependence on reinsurance, used to manage the group’s capacity, as an offsetting rating factor.

The associated risks are mitigated partially by the high credit quality of its reinsurance partners, many of which TT Club has long-established relationships with. In recent years, TT Club has actively reduced the average line size of its members, partially reducing this dependence.

TTB’s adequate operating performance is demonstrated by a five-year (2017-2021) weighted average return-on-equity ratio of 6.4 per cent, reflecting profitable underwriting, evidenced by a five-year weighted average combined ratio of 98.3 per cent (as calculated by AM Best), and positive investment returns.

Underwriting performance weakened in 2021, relative to 2020, with the combined ratio rising by approximately nine points to 102.7 per cent (as calculated by AM Best).

The underwriting loss included significant exceptional costs relating to information technology projects. TT Club reported a small underwriting profit if these costs are excluded.

TT Club is a specialist mutual insurance organisation, operating in the international transport and logistics industry. It offers property and liability risk cover for port, ship and logistics operators, and provides loss prevention and risk management services to its members.

The mutual has a strong position in its niche market, which is highlighted by its excellent member retention and supported by its global presence.

However, AM Best considers TTB’s business profile to be limited, owing to its relatively small size and concentration by line of business.