AM Best affirms Hamilton's credit ratings
Hamilton Insurance Group's subsidiaries' credit ratings have been confirmed with a positive outlook by ratings agency AM Best, which praised the company's move to a more diversified underwriting portfolio.
AM Best said the financial strength ratings of A- (Excellent) and the long-term issuer credit ratings of “a-” (Excellent) of Bermuda-based Hamilton Re, Ltd. and Dublin-registered Hamilton Insurance Designated Activity Company, each owned by Hamilton Insurance Group, Ltd. The outlook of these Credit Ratings (ratings) is positive.
AM Best said the ratings reflect Hamilton’s balance sheet strength, which was assessed as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The ratings agency said recent strategic shifts, including a transition towards a more diversified underwriting portfolio, had reduced underwriting performance volatility, which previously weighed on its balance street strength.
But it added: "Hamilton’s balance sheet strength assessment of very strong also reflects its relatively high-risk investment strategy on the portion of invested assets managed by Two Sigma Investments, LP, an SEC-registered investment adviser.
"The operating performance assessment of adequate is supported by Hamilton’s historical investment returns and underwriting results, which have trended favourably over the last five years, although the group has not yet achieved underwriting profitability.
"Underwriting improvements have stemmed from the group’s diversification efforts and the favorable rate environment, as well as the re-underwriting measures across the business and the recent integration of the Pembroke Managing Agency platform at Lloyd’s acquired in 2019.
"Year-end 2022 performance was hindered by unrealised losses in the group’s fixed income portfolio, though it is AM Best’s expectation that these unrealised losses will not be realised, and the securities will be held to maturity."
AM Best added: "The positive outlooks reflect AM Best’s expectation that Hamilton will maintain its improving trend of profitability and continue generating earnings that are accretive to the group’s balance sheet strength.
"Positive rating actions could result if Hamilton continues to display an improving trend of underwriting profitability, along with continued accretive investment performance, thereby lessening the performance volatility that has weighed on its balance sheet strength assessment."
But AM Best warned: " The ratings could be affected negatively if turmoil in the capital markets severely impacts the group’s risk-adjusted capitalization and/or investment performance."
Hamilton appointed long-time director and industry veteran David A Brown (pictured) as chairman earlier this month.