Hiscox ratings affirmed by AM Best
Hiscox Insurance Company (Bermuda) Ltd, Hiscox Insurance Company Ltd and Hiscox Insurance Company (Guernsey) Ltd have been affirmed the financial strength rating (FSR) of A (excellent) and issuer credit rating (ICR) of “a” by AM Best Europe Rating Services Ltd.
Concurrently, Best has affirmed the FSR of A (excellent) and ICR of “a+” of Lloyd’s Syndicate 33, which is managed by Hiscox Syndicates Ltd and the ICR of “bbb+” of Hiscox Ltd, the ultimate parent holding company of the Hiscox group of companies. The outlook for all ratings remains stable.
The ratings of the Hiscox operating companies continue to benefit from the strong consolidated risk-adjusted capitalisation and good financial flexibility of the Hiscox group, said Best. Financial leverage is low and liquidity is enhanced by the availability of a $750 million credit facility, which can be issued in the form of a letter of credit against which the group can underwrite at Lloyd’s.
The group has a good performance record, demonstrated by an average five-year combined ratio below 90 percent, said Best. For 2011, performance will be affected by exposure to the year’s large catastrophes, with losses from the Japan and New Zealand earthquakes, Australian flooding and US tornadoes reserved at £210 million at half year 2011. Earnings from the more stable portfolios written by Hiscox and Hiscox Guernsey as well as positive prior year reserve development are expected to partly offset catastrophe losses, and AM Best expects a combined ratio only slightly above 100 percent. Investment income for 2011 is expected to be modest, reflecting the low interest rate environment. The group reported unrealised losses in the third quarter of 2011 due to equity market movements and widening credit spreads.