Ratings agency A.M. Best Co. today [Dec. 18] upgraded the issuer credit rating to “a+” from “a” and affirmed the financial strength rating of ‘A’ (Excellent) of Chicago-based Hiscox Insurance Company, Inc. [HICI], a subsidiary of Bermuda’s Hiscox. Both ratings have stable outlooks.
Best said the ratings of HICI “reflect the consolidation of HICI and its inactive subsidiary, Bracken Hill Specialty Insurance Company.
The upgrading of HICI’s ICR reflects the same rating action for HICI’s affiliate, Hiscox Insurance Company (Bermuda) Limited, which provides substantial quota share reinsurance to HICI.
Best also explained that the ratings are based upon its criteria, “Rating Members of Insurance Groups,” and “take into consideration the role and strategic importance of HICI to its Bermudian parent holding company, Hiscox Ltd. and its overall US strategy.
The ratings also acknowledge the explicit support provided to HICI by Hiscox Bermuda as well as a guarantee on all third party reinsurance recoverables with Hiscox.
The ratings also recognise the implied commitment from Hiscox that it will provide future support to HICI if needed.”
Best noted that “HICI continues to maintain a strong level of stand-alone capitalization, which is driven by low underwriting leverage and minimal investment leverage” Best also said it would “continue to monitor the operating performance of HICI going forward, given that its recent premium and exposure growth has occurred during a period of competitive market conditions. Positive rating actions for HICI are unlikely in the near term.
“Factors that may lead to negative rating actions include a material deterioration in the company’s risk-adjusted capitalization, significant weakening in its operating results, any negative rating actions taken on Hiscox Bermuda and/or any lessening of support (implied or explicit) provided to HICI by Hiscox.”
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