A.M. Best Affirms Credit Ratings Of Hamilton Re

May 29, 2018

A.M. Best has affirmed the Financial Strength Rating of A- [Excellent] and the Long-Term Issuer Credit Ratings of “a-” Hamilton Re, Ltd. [Hamilton Re] [Bermuda]. The outlook of these Credit Ratings is stable.

The ratings agency said, “The ratings reflect Hamilton Re’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management [ERM].

“Hamilton Re’s very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio [BCAR], coupled with strong liquidity and financial flexibility due to its access to a deep pool of private investors, collectively contribute to A.M. Best’s balance sheet assessment of very strong. Hamilton Re’s investment portfolio performance, which has consistently generated market-leading returns that outperform the company’s peer composite, partially offset by expense driven underwriting losses, leads to an operating performance assessment of adequate.

“While A.M. Best believes that Hamilton Re is well-positioned at the current rating level, improved underwriting performance, achieved by leveraging Two Sigma Investment’s [TSI] data and predictive analytic capabilities and enabling the company to produce consistently favorable loss ratio experience, combined with improved economies of scale and solid risk-adjusted capitalization, could lead to positive rating movement in the near to medium term.

“Because of its alternative investment strategy, Hamilton Re may be exposed to a convergence of events that could test its capital strength. The underwriting and significant investment risks could have a duplicative adverse effect on their risk-adjusted capital levels. The company’s assets are managed by TSI, a New York, NY-based, process-driven systematic investment manager focused on global liquid markets. TSI applies its technology and expertise in financial markets to generate uncorrelated returns consistently across a wide range of market conditions. Hamilton Re’s BCAR has been stressed under multiple adverse scenarios – yet the capitalization remains strong and supportive of the rating level.

“A.M. Best views Hamilton Re’s business profile as neutral. Although the company is one of the newest players in the Bermuda market, it has been successful at building brand recognition, which is a testament to the seasoned senior management team, and is in a solid position for continued growth. Hamilton has multiple distribution platforms, including a Lloyd’s syndicate and the Bermuda operating company, following the sale of Hamilton’s two U.S. operating companies to American International Group, Inc. [AIG], which was completed in October 2017. Moreover, Hamilton benefits from a strategic relationship with AIG, under which the company has the opportunity to participate in an increased volume of AIG’s ceded reinsurance business. Additionally, A.M. Best considers Hamilton Re’s ERM as developed and appropriate for its overall business risk profile.”

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