Ratings agency AM Best has affirmed financial ratings of Bermudian-based Hamilton Insurance Group’s companies.

AM Best retained the A- (excellent) financial strength rating of Hamilton Re, Hamilton Specialty Insurance Company and Hamilton Insurance Company.

It also affirmed the a- issuer credit ratings for the three firms.

The agency said the outlook for all the ratings was stable.

AM Best said the Hamilton Re rating was based on its “excellent risk-adjusted capitalisation, knowledgeable management team and favourable operating results including underwriting profitability.

It added: “Partially offsetting these positive rating factors are the start-up nature of the company, the greater investment risk associated with an alternative investment strategy, the execution risk associated with HSIC and HIC, as well as the increased competition in the reinsurance marketplace that may challenge some of the company’s business plans.”

The AM Best report added the agency was “concerned there is a possibility that Hamilton could be exposed to a convergence of events due to the adjoining of underwriting risk and the present risk in an alternative investment strategy.”

And it said: “Also of concern is the relatively high gross investment leverage used by its investment manager Two Sigma Investments. These risks could have an adverse effect on the company’s risk-adjusted capital.

“However, these risks are mitigated by the partially hedged nature of the portfolio, the large number of diversified liquid investments and TSI’s lengthy investment track record, which includes significant positive investment results through the recent market volatility.”