Best’s News & Research Service - September 22, 2022 09:37 AM (EDT)
AM Best Affirms Credit Ratings of Ascot Group Limited’s Operating Subsidiaries
- September 22, 2022 09:37 AM (EDT)
London //BestWire// - AM Best has affirmed the Financial Strength Ratings (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” (Excellent) of Ascot Bermuda Limited (Ascot Bermuda) (Bermuda), as well as Ascot Insurance Company (AIC), Ascot Specialty Insurance Company (ASIC) and Ascot Surety & Casualty Company (ASCC) (all headquartered in New York, NY unless otherwise specified). AIC, ASIC and ASCC are collectively referred to as Ascot Insurance U.S. Group (Ascot U.S.). Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) of AmFed National Insurance Company and its 100% reinsured subsidiaries, AmFed Casualty Insurance Company and AmFed Advantage Insurance Company. These companies are domiciled in Ridgeland, MS and collectively referred to as AmFed Insurance Group (AmFed). AM Best also has affirmed the Long-Term Issue Credit Rating of “bbb+” (Good) of the USD 400 million, 4.25% fixed rate senior unsecured notes due 2030, issued by Ascot Group Limited (Ascot). The outlook of these Credit Ratings (ratings) is stable.
The ratings of Ascot Bermuda and Ascot U.S. reflect the consolidated balance sheet strength of Ascot, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). Additionally, Ascot receives rating enhancement from its parent, CPP Investments, which is considered to be of superior financial strength and supportive of Ascot’s strategy. AM Best views Ascot Bermuda and Ascot U.S. as strategically important to Ascot; Ascot Bermuda is a platform for growth in Bermuda’s (re)insurance market, while Ascot U.S. is expected to become a source of diversification and growth within the U.S. E&S and admitted lines market. Both are integrated fully within the group’s operations and management with Ascot U.S. supported by a net worth maintenance agreement.
Ascot is a property and specialty (re)insurance group, with 2021 gross written premium of USD 2.8 billion. Ascot U.S. and Ascot Bermuda increasingly provide diversification to this group’s underwriting portfolio, which has historically had a concentration in U.S. property risks. While expansion remains subject to moderate execution risk, Ascot has a stable and experienced management team that has been strengthened appropriately as its business has grown.
The group’s balance sheet strength is underpinned by its risk-adjusted capitalisation that AM Best expects to be maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by prudent capital management. The balance sheet strength assessment benefits from the excellent financial flexibility offered by CPP Investments. Since acquiring Ascot Underwriting Holdings Limited in 2016, CPP Investments has made several capital injections to support the group’s growth, demonstrating its ongoing commitment.
Ascot has a track record of good underwriting performance, demonstrated by Syndicate 1414’s five-year weighted average combined ratio of 94.4% over 2017-2021, which was approximately 10 percentage points below the same metric for the overall Lloyd’s market. In 2021, despite generating an underwriting profit, Ascot reported an overall loss of USD 30 million, compared with a profit of USD 150 million in 2020, driven by unrealised investment losses as a result of interest rate increases. AM Best expects these unrealised losses to have a transitory effect on the net result of Ascot and the group to recover these losses in the medium term.
The ratings of AmFed reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM. The ratings also consider, in the form of lift, the support it receives from Ascot, its parent company. Ascot provides financial support through a net worth maintenance agreement and operational support that includes but is not limited to, investment, risk management, distribution and other back office functions.
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.