AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit ratings of “a+” (Excellent) of Hiscox Insurance Co (Bermuda), Hiscox Insurance Co (United Kingdom), Hiscox Insurance Co (Guernsey) and Hiscox Insurance Co (Chicago).

The credit ratings agency also affirmed the long-term ICR of “bbb+” (Good) of Hiscox (Bermuda), the ultimate non-operating holding company of the Hiscox Group. The outlook of these credit ratings is stable.

Hiscox’s ratings reflected the group’s balance sheet strength, which AM Best assessed as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

The ratings of subsidiaries, HIB, HICL, HIG and HICI, showed their strategic importance to Hiscox, as well as their integration within the group, AM Best said.

The agency added that Hiscox Group’s balance sheet strength was underpinned by its consolidated risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio.

“The balance sheet strength assessment also considers the group’s good financial flexibility, its conservative investment strategy and prudent reserving practices,” the agency said. “An offsetting factor is the group’s material exposure to catastrophe risk, although this risk is well-managed through the use of reinsurance and its experienced catastrophe exposure team.”

A spokesman said Hiscox has a track record of strong underwriting performance across the cycle, supported by a diverse earnings profile.

In recent years, underwriting portfolio management and favourable market conditions have supported robust technical performance, as evidenced by a three-year (2022 to 2024) weighted average net/net combined ratio of 88.1 per cent, as calculated by AM Best.

AM Best expected the group’s performance to remain strong across the underwriting cycle, supported by Hiscox’s segmental diversification, with the retail business offsetting pressures from rate softening affecting big ticket business, as well as volatility from potential catastrophe losses.