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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 06, 2019 01:57 PM (EDT)
AM Best has removed from under review with negative implications and downgraded the Financial Strength Rating to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Rating to “a-” from “a” of Ironshore Europe Designated Activity Company (Ironshore Europe) (Dublin, Ireland). The outlook assigned to these Credit Ratings (ratings) is stable.
The rating downgrades follow the purchase by Hamilton Insurance Group, Ltd. (Hamilton) of Ironshore Europe, from Liberty Mutual Holding Company Inc. (LMHC) and reflect Ironshore Europe becoming a member of the Hamilton rating unit. Prior to the transaction’s close, Ironshore Europe was a member of a higher rated LMHC rating unit.
The rating reflects Ironshore Europe’s group rating status and considers Ironshore Europe’s participation in a material reinsurance agreement with Hamilton Re, Ltd., its new affiliate, as well as the benefit the company receives from a capital maintenance agreement with the ultimate parent of the group, Hamilton. Ironshore Europe is strategically important to Hamilton given its non-Lloyd’s capabilities and access to the U.S. and European Union (EU) markets.
Hamilton’s ratings reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The acquisition includes Ironshore Europe’s affiliates, Pembroke Managing Agency Limited (United Kingdom) and Visionary Underwriting Agency Limited (United Arab Emirates), as well as a U.S. managing general agent writing on behalf of the group. These entities, along with Ironshore Europe, provide Hamilton with the means to realize its growth strategy to build a profitable global, diversified specialty insurance and reinsurance company. This acquisition doubles Hamilton’s gross written premium on a pro-forma basis and given the profitability of the acquired businesses, should positively contribute to Hamilton’s underwriting performance. In addition, it will provide scale at Lloyd’s, additional underwriting talent, fee-based income and broader access to the U.S. and EU markets. The additional earnings will moderate Hamilton’s dependence on the robust earnings generated by its alternative investment strategy, which is in the form of a closed-end fund.
As Hamilton reaches scale and enhances its underwriting performance, related earnings are expected to be invested in highly rated traditional fixed income securities, which will further diversify Hamilton’s overall earnings profile and limit its susceptibility to investment volatility.
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 Understanding 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.
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