Ratings firm A.M. Best has given a strong financial strength rating to a Guernsey specialist insurer that is part of the Hiscox group, largely on the merits of a reinsurance agreement with Hiscox's new reinsurer in Bermuda.

A.M. Best assigned an 'A-' rating to Hiscox Insurance Company (Guernsey) Ltd., a company that it said had "excellent risk-adjusted capitalisation" enhanced by the support of a comprehensive reinsurance programme placed principally with Hiscox Insurance Company (Bermuda) Ltd. Hiscox Guernsey expects to increase its capital to about $40 million by year end, an increase of $10 million from 2005.

A.M Best said it considered Hiscox's Guernsey unit a "significant leader in the offshore fine art market" as well as being a dominant player in the kidnap and ransom market. Hiscox is known for providing insurance in these profitable, niche areas. And the Hiscox Bermuda unit is reinsuring a portion of these risks.

An issuer credit rating of "a-" was also assigned to Hiscox Guernsey. The outlook for both ratings is stable, or unlikely to change.