Bermuda-based Hiscox Ltd.'s subsidiaries have been affirmed the financial strength ratings (FSRs) of A (excellent) and issuer credit ratings (ICRs) of "a" by AM Best.

Hiscox Insurance Company (Bermuda) Ltd. (Hiscox Bermuda), Hiscox Insurance Co. Ltd. (Hisco), Hiscox Insurance Co. (Guernsey) Ltd. (Hiscox Guernsey) and Hiscox Insurance Co. Inc. (Hiscox US) have also been assigned stable outlook ratings.

In Best's opinion, the Hiscox operating entities continue to benefit from the excellent consolidated risk-adjusted capitalisation of the group's holding company, Hiscox Ltd. In addition, each operating company has a strong business profile in its respective market, which is enhanced by its membership of the Hiscox group.

The ratings agency expects Hiscox Bermuda to maintain excellent stand-alone risk-adjusted capitalisation, supported by strong financial performance and factoring in the likely payment of a significant dividend at year-end 2009.

The ratings also reflect Best's expectation that the correlation between the reinsurance business written by Hiscox Bermuda and that written by other group companies, particularly Lloyd's Syndicate 33, will remain strong. This business, together with business ceded from Hisco and Hiscox Guernsey, continues to provide the company with a well-established and geographically diverse portfolio.

The ratings of Hiscox Guernsey continue to show the explicit support of Hiscox Bermuda, which reinsures substantially all of its gross premiums written in 2009, according to Best. In addition, the company has an excellent business profile as a specialist underwriter of fine art and kidnap and ransom business.

Hisco is likely to maintain excellent stand-alone risk-adjusted capitalisation in 2009, supported by robust retained earnings, said the ratings agency.

The company's technical performance is expected to deteriorate in 2009 due to adverse claims experience for its European business. Nevertheless, strong improvement in investment performance is likely to support a modest increase in Hisco's pre-tax profit from £18.2 million in 2008.

The ratings also factor in the benefit of reinsurance support from Hiscox Bermuda.