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Best’s News & Research Service - November 03, 2023 08:36 AM (EDT)

AM Best Affirms Credit Ratings of Hiscox Ltd and Its Subsidiaries

  • November 03, 2023 08:36 AM (EDT)
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London //BestWire// - 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) and Hiscox Insurance Company Inc. (HICI) (Chicago, Illinois, USA). 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. The ratings of HIB, HICL, HIG and HICI reflect their strategic importance to Hiscox, as well as their integration within the group.

The 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 Lloyd’s Syndicate 33, which is one of the largest Lloyd’s syndicates based on 2022 gross written premium (GWP).

The Hiscox group’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.

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 (2013-2022) weighted average combined ratio of 96% and a return-on-equity ratio of 7%. The group produced a combined ratio of 92% in 2022; however, unrealised investment losses led to a decline in profit after tax to USD 41.7 million from USD 189.5 million in 2021. The investment losses in 2022 were driven mainly by a rise in interest rates and largely reversed during the first six months of 2023 with a portion of the group’s investment portfolio reaching maturity. Strong underwriting performance and a rebound in investment performance resulted in the group reporting a robust profit after tax of USD 250 million for the first six months of 2023.

AM Best expects the group’s underlying performance to remain strong over the short-to-medium term, supported by portfolio rebalancing and hardening rates in key lines in Hiscox’s London Market and reinsurance portfolios.

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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