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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - DECEMBER 13, 2012 12:00 AM (EST)
A.M. Best Co. has upgraded the issuer credit rating (ICR) to “a+” from “a” and affirmed the financial strength rating of A (Excellent) of Hiscox Insurance Company, Inc. (HICI) (Chicago, IL). The outlook for both ratings is stable. The ratings of HICI reflect the consolidation of HICI and its inactive subsidiary, Bracken Hill Specialty Insurance Company.
The upgrading of HICI’s ICR reflects the same rating action for HICI’s affiliate, Hiscox Insurance Company (Bermuda) Limited (Hiscox Bermuda), which provides substantial quota share reinsurance to HICI. These ratings are based upon A.M. Best’s criteria, “Rating Members of Insurance Groups,” and take into consideration the role and strategic importance of HICI to its Bermudian parent holding company, Hiscox Ltd. (Hiscox), and its overall U.S. strategy. The ratings also acknowledge the explicit support provided to HICI by Hiscox Bermuda as well as a guarantee on all third party reinsurance recoverables with Hiscox. The ratings also recognize the implied commitment from Hiscox that it will provide future support to HICI if needed.
HICI continues to maintain a strong level of stand-alone capitalization, which is driven by low underwriting leverage and minimal investment leverage. A.M. Best will continue to monitor the operating performance of HICI going forward, given that its recent premium and exposure growth has occurred during a period of competitive market conditions.
Positive rating actions for HICI are unlikely in the near term. Factors that may lead to negative rating actions include a material deterioration in the company’s risk-adjusted capitalization, significant weakening in its operating results, any negative rating actions taken on Hiscox Bermuda and/or any lessening of support (implied or explicit) provided to HICI by Hiscox.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.