LONDON: AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Humboldt Re Limited (Guernsey). The outlook of these ratings remains stable.

 The ratings reflect Humboldt Re’s balance sheet strength, which AM Best categorises as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

Humboldt Re has generated mostly negative underwriting results in its short history of operation, having been impacted by catastrophe losses in most years. Following publication of the company’s financial results for 2019, AM Best notes the negative impact of a number of catastrophe events in the year as well as adverse experience on reserves relating to catastrophe events in 2017 and 2018.

However, AM Best also notes that these losses are reflective of the company’s business model and are within its risk appetite. In line with its business plans, Humboldt Re has modified its underwriting exposures in 2020, which is expected to reduce the volatility in technical performance going forward. However, the successful execution of the company’s strategy is subject to execution risk in AM Best’s opinion.

Humboldt Re’s balance sheet strength is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, conservative investment portfolio, good financial flexibility and a dynamic retrocession programme. The company’s risk-adjusted capitalisation declined at year-end 2019, due to an operating loss and higher underwriting risk requirements, but remained well-supportive of the strongest level.

Humboldt Re is a privately owned company based in Guernsey that provides short-tail property catastrophe and specialty lines reinsurance. The company derives its business using the origination capabilities of Credit Suisse’s Insurance-Linked Strategies team, a leading insurance-linked securities hedge fund.