A.M. Best Co. has upgraded the financial strength ratings (FSR) and issuer credit ratings (ICR) of several operating companies of Bermuda-based Hiscox Ltd due to the "excellent consolidated risk-adjusted capitalization" of the parent company.
The Oldwick, N.J.-based rating agency increased the FSR of Hiscox Insurance Company (Bermuda) Limited (Hiscox Bermuda), Hiscox Insurance Company Limited (Hisco), and Hiscox Insurance Company (Guernsey) Limited (Hiscox Guernsey) to "A" from "A-minus," and increased the ICR of the companies to "a" from "a-minus."
Regarding Hiscox Bermuda, Best said its risk-adjusted capitalization is stronger and has stabilized earlier than anticipated since its 2005 start. This is partly because a lower growth in net written premiums means the company has not paid a dividend since 2005 and has been able to retain its earnings. Best also cited Hiscox Bermuda's underwriting portfolio and the reinsurance ceded to it from other Hiscox group members.
Hiscox Guernsey "benefits from the explicit support of Hiscox Bermuda, which substantially reinsures Hiscox Guernsey's underwriting," Best said, and through that and other reinsurance agreements the company retains "very little residual risk."
Best said Hisco's rating upgrades "are based on its strengthening risk-adjusted capitalization, which is expected to be supported by excellent retained earnings in 2008 and increased use of internal reinsurance from Hiscox Bermuda."
Best also said the company is expected to report a combined ratio below 100 this year, adding that Hisco's focus on specialist risks may protect it somewhat from the overall soft market.
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