Hiscox Ltd. (Bermuda) has seen its operating companies upgraded by AM Best Co.

Best upgraded all of their financial strength ratings (FSR) to A (excellent) from A- (excellent) and the issuer credit ratings (ICRs) to "a" from "a-".

The operating companies are Hiscox Insurance Co. (Bermuda) Ltd. (Hiscox Bermuda), Hiscox Insurance Co. Ltd. (Hiscox) and Hiscox Insurance Co. (Guernsey) Ltd. (Hiscox Guernsey).

The ratings agency has also affirmed the FSR of A (excellent) and ICR of "a" of Hiscox Insurance Co. Inc. (Hiscox US), the group's admitted US insurer. The outlook for all ratings is stable.

Best said the financial strength of the Hiscox operating companies is supported by the excellent consolidated risk-adjusted capitalisation of the group's ultimate parent holding company, Hiscox Ltd. and by reinsurance agreements.

Best said Hiscox Bermuda's risk-ajdjusted capitalisation was stronger than anticipated following its 2005 start.

The company benefits from internal group reinsurance ceded from Hisco, Hiscox Guernsey and Hiscox Dedicated Corporate Member Ltd. (a capital provider to Lloyd's Syndicate 33, managed by Hiscox Syndicates Ltd.). The reinsurance ceded to Hiscox Bermuda from other group members provides the company with a widely diversified book of international business that has a proven track record of profitability.

Hiscox Bermuda is expected to increase the proportion of its business from these sources during 2008.

In addition, the company writes an external book of property catastrophe reinsurance risks, many of which are also underwritten by Syndicate 33., Best said.