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Best’s News & Research Service - December 02, 2021 09:56 AM (EST)

AM Best Affirms Credit Ratings of Group Ark Insurance Limited

  • December 02, 2021 09:56 AM (EST)

London //BestWire// - AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Group Ark Insurance Limited (GAIL) (Bermuda). GAIL is a wholly owned subsidiary of Ark Insurance Holdings Limited (Ark), the non-operating holding company of the Ark group. Concurrently, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) on GAIL’s outstanding rated instruments. The outlook of these Credit Ratings (ratings) is stable. See below for a detailed listing of Long-Term IR ratings.

The ratings reflect Ark’s consolidated balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). In addition, the ratings reflect GAIL’s strategic importance to Ark, as the group’s Bermuda-based (re)insurance vehicle. GAIL provides reinsurance to Ark’s corporate member at Lloyd’s and commenced the writing of third-party (re)insurance business in 2021, in line with the group’s scale-up business plan.

Ark is a property, casualty and specialty (re)insurance group, operating through an established Lloyd’s platform. In 2021, Ark began the process of scaling up its Lloyd’s platform and started to underwrite third-party insurance and reinsurance business from Bermuda through GAIL.

The very strong balance sheet strength assessment reflects Ark’s consolidated risk-adjusted capitalisation, which is projected remain at the strongest level over the five-year business plan period, as measured by Best’s Capital Adequacy Ratio (BCAR). The group’s scale up is supported by USD 605 million of capital from White Mountains Insurance Group, Ltd. (WTM), injected on 1 January 2021, and the issuance of USD 164 million of subordinated debt during 2021. Ark is exposed to material catastrophe risk, which is considered a partially offsetting factor in the assessment, although AM Best expects this risk to continue to be managed through the appropriate use of reinsurance and robust exposure management.

The adequate operating performance assessment considers the group’s five-year business plan, and Ark’s robust underwriting performance track record at Lloyd’s. AM Best expects Ark to maintain good technical return metrics over the underwriting cycle, notwithstanding the execution risk associated with its continued scale up. Ark reported a combined ratio of 95.4% for the first nine months of 2021, which is expected to improve as rate increases on the 2021 year-of-account earn through.

Ark’s neutral business profile assessment is reflective of its profile at Lloyd’s, and its current and projected diversified underwriting portfolio. Ark benefits from experienced and stable management and underwriting teams, which partially mitigates the execution risk associated with the material scale up of its operations.

The following Long-Term IRs have been affirmed with a stable outlook:

Group Ark Insurance Limited—

—“bbb+” (Good) on EUR 39.1 million floating rate subordinated notes, due 2041

—“bbb+” (Good) on USD 47 million floating rate subordinated notes, due 2041

—“bbb+” (Good) on USD 70 million floating rate subordinated notes, due 2041

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 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.

Best's Credit Rating Action Press Release Financial Strength A.M. Best Rating Services, Inc. Insurance Issuer Credit Rating Bermuda

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