FLOOD RE WELCOMES S&P RATINGS UPGRADE AND RECOGNITION THAT THE SCHEME HAS “SUCCESSFULLY SURPASSED THE CRITICAL START-UP PHASE”
Flood Re welcomes today’s announcement from ratings agency Standard & Poor’s (S&P) that it has upgraded Flood Re’s credit rating to A (Stable) from A- (Stable).
In its latest research update, S&P noted that Flood Re’s successful management of claims throughout the heavy winter flooding in November 2019 and February 2020 (the worst since Flood Re was set up in April 2016), demonstrated that it has passed its first major test – with “the levy scheme, reinsurance structure, and outsourcing of activities such as claims handling [having] worked effectively”.
S&P also commented that the Scheme had “successfully surpassed the critical start-up phase”, and indicated its “expectation that over the two-year horizon Flood Re will maintain risk-based capital adequacy in excess of its ‘AAA’ benchmark, and that UK home insurers will continue to use the Flood Re Scheme”.
Andy Bord, Chief Executive of Flood Re, said:
“Our recently announced 2019/20 annual results demonstrate that following the first major flooding events since our launch in April 2016, we continue to be a financially-robust organisation.
“We are therefore pleased to see that S&P has recognised our strong position and we believe that this upgraded rating will reaffirm to our stakeholders that we have the capital base, long-term plan and operational efficiency to continue enabling homes in flood risk areas to access affordable home insurance for the lifetime of Flood Re’s existence and beyond.”
The announcement comes on the back of a strong set of results in Flood Re’s recently announced 2019/20 Annual Report, with highlights including:
· Benefitting more homeowners: The number of policies in 2019/20 (196,638) is 20% higher than 2018/19. More than 300,000 properties have benefitted from the Scheme since its launch four years ago.
· Delivering availability: 94% of the home insurance market offer the Scheme and 97% of homeowners with prior flood claims can now receive quotes from five or more insurers.
· Delivering affordability: Four out of five households with previous flood claims have seen a price reduction of more than 50%.
· Higher awareness: Helped launch the first National Flood Forum Flood Risk Communities’ Charter and supported the Environment Agency’s ‘What the Flood?’ campaign.
· A strong financial position:
o An increase in invested and liquid assets to £487m (2018/19: £358m)
o Solvency capital ratio of 522% (2018/19: 349%)
o Profit before tax of £61m (2018/19: £136m)
o Gross insurance claims of £161m (2018/19: £16m)