SEPTEMBER 04, 2020 11:46 AM (EDT)
AM Best Revises Issuer Credit Rating Outlooks to Positive and Affirms Ratings of Ascot Group Limited’s Operating Subsidiaries
FOR IMMEDIATE RELEASE
LONDON - SEPTEMBER 04, 2020 11:46 AM (EDT)
The Credit Ratings (ratings) reflect the consolidated balance sheet strength of Ascot Group Limited (Ascot), which AM Best categorises as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. Additionally, the ratings benefit from rating enhancement, in the form of a lift, from Ascot’s ultimate parent, Canada Pension Plan Investment Board (CPPIB). CPPIB is considered to be of superior financial strength, and AM Best expects it to support Ascot’s strategy. Ascot Bermuda is the group’s internal reinsurer and a platform for growth in Bermuda’s reinsurance market. AIC and ASIC (collectively referred to as Ascot U.S.) are sources for diversification and growth within the U.S. admitted lines market, and are supported by a net worth maintenance agreement with Ascot. The three entities are fully integrated within the group’s operations and management.
Ascot is a property and specialty (re)insurance group, with 2019 gross written premium (GWP) of USD 1,162 million. In past years, the group’s business was sourced primarily via its flagship risk carrier, Lloyd’s Syndicate 1414 (Syndicate 1414), which is managed by Ascot Underwriting Limited. The group is led by an experienced and stable management team. Ascot Bermuda started underwriting in 2018 and grew to GWP of USD 224 million in 2019. Ascot U.S. started underwriting in May 2019 and reported USD 70 million of GWP in its first eight months of operation, with strong growth anticipated in future years. Both operations currently provide moderate diversification to the group’s underwriting portfolio, which historically has had concentration to property risk (in particular, U.S. catastrophe risks). Expansion in Bermuda and the United States remains subject to execution risk.
The revision of the Long-Term ICR outlooks to positive reflects AM Best’s expectation that Ascot’s underwriting portfolio will continue to diversify as the group develops its U.S. and Bermudian operations, which could impact the business profile assessment positively.
Ascot’s balance sheet strength is underpinned by risk-adjusted capitalisation that is expected to be maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by prudent capital management. The balance sheet strength assessment benefits from the excellent financial flexibility offered by CPPIB. Since acquiring Ascot Underwriting Holdings Ltd. in 2016, CPPIB has made several capital injections to support the group’s growth, demonstrating its ongoing commitment.
Ascot has a track record of robust underwriting performance, evidenced by Syndicate 1414’s five-year weighted average combined ratio of 96.0% over the period 2015-2019, which was approximately six percentage points below the same metric for the overall Lloyd’s market. After challenges in 2018, largely due to expenses stemming from the startup nature of Ascot U.S, Ascot’s profitability improved markedly in 2019. AM Best expects profitability to remain stable in the medium term, subject to sustainable growth from the group’s new undertakings in the United States and Bermuda.
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.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.