Standard & Poor's Ratings Services said the insurer financial strength rating and long-term counterparty credit rating for United Kingdom-based Hiscox Insurance Co. Ltd. has been raised to "A" from "A-minus." The outlook is stable.

HISCO is a major unit of Bermuda-based insurer Hiscox Group.

Standard & Poor's credit analyst Matthew Day said in a statement that the move reflected strong operating performance and expectation "for continued underwriting discipline and robust earnings going forward."

The rating also reflects the company's strong capitalization. Mr. Day added that the company has differentiated itself from its peers and "enhanced its competitive position through continued brand development and product innovation."

However, he cautioned that the company faces challenges from the current economic turmoil that is expected to "persist for the next 12 to 24 months." In S&P's view it has reduced financial flexibility, which is considered a weakness.

Hiscox does not hold as much excess capital as a number of its similarly rated peers, S&P said, making it "more exposed than peers to the systemic decline seen in the level of access to capital markets over the past 15 months," which could place pressure on the rating.

"We expect that Hiscox's enhanced competitive position will be maintained, particularly in respect of the high-net-worth segment of the retail portfolio," said Mr. Day.

Further upward movement in the rating is not expected over the rating horizon, said S&P.

Failure to control volatility in the underwriting performance leading to material underwriting losses, or the emergence of a shortfall in capitalization relative to expectations, could prompt a review of the rating with negative implications, S&P added.

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S&P Raises Rating On Hiscox U.K.

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