OLDWICK: AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of Hiscox Insurance Company (Bermuda) Limited (Hiscox Bermuda), Hiscox Insurance Company Limited (Hisco) (United Kingdom), Hiscox Insurance Company (Guernsey) Limited (Hiscox Guernsey), Hiscox Insurance Company Inc. (HICI) (Chicago, Illinois, USA), and Lloyd’s Syndicate 33 (Syndicate 33) (United Kingdom), which is managed by Hiscox Syndicates Limited.

At the same time, AM Best has affirmed the Long-Term ICR of “bbb+” of Hiscox Ltd (Hiscox) (Bermuda), the ultimate non-operating holding company of the Hiscox group of companies. The outlook of these Credit Ratings (ratings) remains stable.

The ratings of Hiscox reflect the group’s consolidated balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The ratings of Hiscox Bermuda, Hisco, Hiscox Guernsey and HICI reflect their strategic importance to Hiscox, as well as their strong integration within the group. The ratings of Syndicate 33 reflect the balance sheet strength of the Lloyd’s market, which AM Best categorises as very strong, as well as the market’s strong operating performance, favourable business profile and appropriate ERM.

The Lloyd’s market rating is the floor for all syndicate ratings, reflecting the Lloyd’s chain of security and, in particular, the role of the Central Fund, which partially mutualises capital at the market level.

Hiscox group is an international (re)insurer with a good brand and a diversified book of business. The group has a strong presence in the Lloyd’s market, primarily through Syndicate 33, which is one of the largest Lloyd’s syndicates based on 2018 gross written premiums (GWP). For the 2019 year of account, the syndicate’s capacity decreased to GBP 1.5 billion (2018: GBP 1.6 billion), in response to challenging conditions in London’s insurance market.

Hiscox’s balance sheet strength is underpinned by consolidated risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The balance sheet strength assessment also considers the group’s good financial flexibility, strong liquidity profile and prudent reserving strategy.

The group has a track record of strong earnings, demonstrated by a five-year weighted average combined ratio of 93% and a return on equity of 11%, over the period 2014-2018. AM Best expects prospective underwriting performance to remain strong, with volatility due to exposure to catastrophe events partly mitigated by earnings from its more stable retail business.

In 2018, the group reported strong GWP growth of 15% and a robust combined ratio of 96%, with the London market business performing notably well. In 2019, AM Best expects the group to report positive earnings, in spite of higher-than-expected claims from its U.S. retail portfolio and losses from catastrophe events including Hurricane Dorian and Typhoons Faxai and Hagibis.