AM Best affirms ‘excellent’ FSR of Harrington Re

AM Best has affirmed the financial strength rating (FSR) of A- (‘excellent’) and the long-term issuer credit rating (ICR) of a- (‘excellent’) of Harrington Re. AM Best has also affirmed the long-term ICR of bbb- (‘good’) of Harrington Reinsurance Holdings. Both companies are domiciled in Bermuda.The outlook of these ratings is stable.

The ratings reflect Harrington’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Harrington, which commenced operations in 2016, is sponsored by AXIS Capital Holdings and The Blackstone Group. Harrington’s risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio (BCAR), was consistent with a “strongest” level assessment. Prospectively, Harrington’s BCAR scores are expected to remain supportive of an overall balance sheet strength assessment of very strong.

“The company employs an alternative asset strategy that contributed significantly to net income in 2021, as fund deployment and asset leverage reached targets. Harrington continues to build out a diversified, multiline reinsurance book of business with a focus on medium to longer-tailed casualty lines,” AM Best said.

“Currently, Harrington does not directly face the market and business is sourced through cessions from AXIS. Harrington has a developed risk management function and also benefits from expertise and systems from both its sponsors,” it added.

Negative rating action could occur if Harrington experiences significant adverse reserve development that impacts capitalisation, the rating agency said. Negative rating action could also occur if Harrington’s investment performance experiences significant downside volatility or if risk-adjusted capitalisation declines materially, it concluded.