AM Best

AM Best Affirms Credit Ratings of Hiscox Ltd and Its Subsidiaries


William Keen-Tomlinson
Associate Director, Analytics
+44 20 7397 4395

Catherine Thomas
Senior Director, Analytics
+44 20 7397 0281
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Al Slavin
Communications Specialist
+1 908 439 2200, ext. 5098


LONDON - OCTOBER 06, 2022 11:10 AM (EDT)
AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” (Excellent) of Hiscox Insurance Company (Bermuda) Limited (HIB), Hiscox Insurance Company Limited (HICL) (United Kingdom), Hiscox Insurance Company (Guernsey) Limited (HIG), Hiscox Insurance Company Inc. (HICI) (Chicago, Illinois, USA) and Lloyd’s Syndicate 33 (Syndicate 33) (United Kingdom), which is managed by Hiscox Syndicates Limited. At the same time, AM Best has affirmed the Long-Term ICR of “bbb+” (Good) of Hiscox Ltd (Hiscox) (Bermuda), the ultimate non-operating holding company of the Hiscox group of companies. The outlook of these Credit Ratings (ratings) is stable.

The ratings of Hiscox reflect the group’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings of HIB, HICL, HIG and HICI reflect their strategic importance to Hiscox, as well as their integration within the group. The ratings of Syndicate 33 reflect the balance sheet strength of the Lloyd’s market, which AM Best assesses as very strong, as well as the market’s strong operating performance, favourable business profile and appropriate ERM. The Lloyd’s market rating is the floor for all syndicate ratings, reflecting the Lloyd’s chain of security, and in particular, the role of the Central Fund, which partially mutualises capital at the market level.

Hiscox group is an international insurer and reinsurer with good brand strength and a diversified book of business. The group has a strong presence in the Lloyd’s market, primarily through Syndicate 33, which is one of the largest Lloyd’s syndicates based on 2021 gross written premiums (GWP).

Hiscox’s balance sheet strength is underpinned by consolidated risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The balance sheet strength assessment also considers the group’s good financial flexibility and strong liquidity profile. The group has a prudent reserving strategy, demonstrated by a history of positive overall reserve development. While reserve strengthening in certain lines of business reduced the level of overall favourable development in 2019 and 2020, AM Best does not expect further adverse development due to management actions including portfolio remediation and loss portfolio transfers.

Despite underwriting losses in 2019 and 2020, driven by COVID-19-related losses and reserve strengthening on certain lines of business, the group has a strong track record of earnings evidenced by a 10-year (2012-2021) weighted average combined ratio of 96% and a return-on-equity ratio of 8%. The group produced a combined ratio of 94% and profit after tax of USD 189.5 million in 2021, which equated to a return-on-equity ratio of 8%. Underwriting results remained strong in the first six months of 2022, with Hiscox reporting a combined ratio of 91%; however, unrealised investment losses led to a loss after tax of USD 87.1 million. These losses are mainly due to rising interest rates and are expected to reverse relatively quickly as the group’s investment portfolio reaches maturity. The duration of Hiscox’s investment portfolio at half-year 2022 was 1.7 years.

AM Best expects the group’s underlying performance to remain strong over the short-to-medium term, supported by portfolio re-balancing and hardening rates in key lines in Hiscox’s London Market and reinsurance portfolios. The group reported growth in GWP of 9% in the first half of 2022, driven mainly by the group’s reinsurance and insurance-linked securities business.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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