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Best’s News & Research Service - May 16, 2024 08:24 AM (EDT)

AM Best Assigns Credit Ratings to Accelerant Insurance Company of Canada; Affirms Credit Ratings of Accelerant Holdings’ Rated Subsidiaries

  • May 16, 2024 08:24 AM (EDT)
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//BestWire// - AM Best has assigned a Financial Strength Rating (FSR) of A- (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) to Accelerant Insurance Company of Canada (AIC) (Canada). The outlook assigned to these Credit Ratings (ratings) is stable. Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICRs of “a-” (Excellent) of Accelerant Insurance Europe SA (AIE) (Belgium), Accelerant Insurance UK Limited (AIUK) (United Kingdon), Accelerant Specialty Insurance Company (ASIC) (Little Rock, AR), Accelerant National Insurance Company (ANIC) (Wilmington, DE) and Accelerant Re (Cayman) Ltd. (Accelerant Re Cayman) (Cayman Islands). The companies are wholly owned subsidiaries of Accelerant Holdings (Accelerant), a non-operating holding company in the Accelerant group. The outlook of these ratings is stable.

The ratings reflect the consolidated balance sheet strength of Accelerant, which AM Best assesses as very strong, as well as the group’s adequate operating performance, limited business profile and appropriate enterprise risk management.

In AM Best’s view, AIE, AIUK, ASIC, ANIC, AIC and Accelerant Re Cayman are strategically important to, and integrated within, Accelerant. AIE, AIUK, ASIC, ANIC and AIC play key roles in the group’s strategy of providing insurance capacity to managing general agents (MGA) in the United Kingdom, the European Union and North America. Accelerant Re Cayman is a reinsurer and is strategically important to the group’s reinsurance and capital management strategy. Accelerant’s licensed (re)insurance carriers benefit from net worth maintenance agreements with the holding company.

Accelerant was established in 2019 and offers underwriting, claims handling and analytical support to its MGA partners. Accelerant reported gross written premium of over USD 1.6 billion in 2023, supported by shareholders’ equity of over USD 300 million and senior debt of approximately USD 120 million, as of December 2023.

Accelerant’s balance sheet strength is underpinned by consolidated risk-adjusted capitalisation that is expected to remain at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The balance sheet strength assessment also considers Accelerant’s good financial flexibility, low risk investment portfolio and strong liquidity profile. The group has a high dependence on reinsurance due to its strategy to retain a low level of underwriting risk. The associated credit risk is mitigated by the use of a diverse panel of financially strong counterparties along with good quality collateral.

The adequate operating performance assessment considers Accelerant’s business plan, taking into account heightened execution risk. Earnings are expected to be supported by steady fee-based income arising from the group’s risk exchange related activities. Furthermore, AM Best expects the group to generate profitable underwriting returns over the longer term, reflective of the good historical performance of its MGA members. As Accelerant’s strategy has evolved, the group has incurred elevated one-off expenses that resulted in operating losses in recent years. Nevertheless, AM Best expects Accelerant to generate profitable overall results once the business is scaled fully.

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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