Best Affirms Hiscox Operating Companies ‘A’ Ratings; Outlook Stable

A.M. Best Co. has affirmed the financial strength ratings (FSRs) of ‘A’ (Excellent) and issuer credit ratings (ICRs) of “a” of Hiscox Insurance Company (Bermuda) Limited, the UK-based Hiscox Insurance Company Limited (Hisco), Hiscox Insurance Company (Guernsey) Limited and Hiscox Insurance Company Inc. (Hiscox US), all operating companies of Bermuda-based Hiscox Ltd. The outlook for all ratings remains stable.

In a separate bulletin Best also affirmed the ‘A’ ratings of Lloyd’s Syndicate 33, which is managed by Hiscox (see IJ web site – https://www.insurancejournal.com/news/international/2009/10/30/104936.htm].

In Best’s opinion “Hiscox operating entities continue to benefit from the excellent consolidated risk-adjusted capitalization of the group’s ultimate holding company, Hiscox Ltd. In addition, each operating company has a strong business profile in its respective market, which is enhanced by its membership of the Hiscox group.

Best expects Hiscox Bermuda to maintain excellent stand-alone risk-adjusted capitalization, supported by strong financial performance and factoring the likely payment of a significant dividend at year-end 2009.”

Best explained that the ratings also reflect its expectation that the “correlation between the reinsurance business written by Hiscox Bermuda and that written by other group companies, particularly Lloyd’s Syndicate 33, will remain strong. This business, together with business ceded from Hisco and Hiscox Guernsey, continues to provide the company with a well established and geographically diverse portfolio.

“The ratings of Hiscox Guernsey continue to reflect the explicit support of Hiscox Bermuda, which reinsures substantially all of its gross premiums written in 2009. In addition, the company has an excellent business profile as a specialist underwriter of fine art and kidnap and ransom business.”

Hisco, Hiscox UK operating company, “is likely to maintain excellent stand-alone risk-adjusted capitalization in 2009, supported by robust retained earnings,” said Best. “The company’s technical performance is expected to deteriorate in 2009 due to adverse claims experience for its European business. Nevertheless, strong improvement in investment performance is likely to support a modest increase in Hisco’s pre-tax profit from £18.2 million [$30 million] in 2008. The ratings also factor the benefit of reinsurance support from Hiscox Bermuda.”

Best also “expects Hiscox US to maintain excellent stand alone risk-adjusted capitalization in 2009. In addition, the company’s ratings reflect reinsurance support provided by Hiscox Bermuda and its strategic importance to the Hiscox group in providing access to the U.S. admitted market.”

Source: A.M. Best – www.ambest.com