AM Best Affirms Credit Ratings Of Lancashire
AM Best has affirmed the Financial Strength Rating of A [Excellent] and the Long-Term Issuer Credit Ratings of “a+” [Excellent] of Bermuda-based Lancashire Insurance Company Limited and Lancashire Insurance Company [UK] Limited.
Additionally, AM Best has affirmed the Long-Term ICR of “bbb+” [Good] of the parent company, Lancashire Holdings Limited. The outlook of these Credit Ratings [rating] is stable.
The ratings agency said, “The ratings reflect Lancashire’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management [ERM].
“Lancashire maintains the strongest levels of risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio [BCAR]. In addition to the strongest level of risk-adjusted capitalization, the assessment of balance sheet strength is supported by the group’s financial flexibility and history of prudent reserving. The group actively manages its capital and raised capital in 2020 to take advantage of favorable market opportunities.
“Also reflected in the ratings is Lancashire’s historically strong overall performance, driven by underwriting results in non-catastrophe affected years and complemented by investment income and fee income. Lancashire maintains an elevated risk profile, as it writes lines of business that have significant exposures to catastrophe activity. Lancashire is a specialty underwriter with a good degree of geographic and product line diversification, as the company’s offerings include primary insurance, reinsurance and retrocessional coverages written on a global basis through traditional capacity, Lloyd’s and its Kinesis platform.
“In terms of ERM, Lancashire’s risk management function is embedded and customized across the entire organization, in line with the group’s elevated risk profile. The group’s historically strong underwriting results are demonstrative of its risk management capabilities.
“Rating factors that could lead to a negative rating action include outsized insurance or investment losses, or a significant decline in risk-adjusted capitalization that would not be supportive of the current rating levels. A negative rating action could also occur if the group experiences a sustained trend of underwriting profitability results that are inconsistent with the current operating performance assessment.”
