AM Best leaves Hamilton ratings unchanged after Pembroke purchase
AM Best has announced that the financial strength rating of A- (Excellent) and the long-term issuer credit ratings of “a-” Hamilton Re remain unchanged following Hamilton Insurance Group’s announcement that it has signed a definitive agreement with Liberty Mutual Group to acquire Pembroke Managing Agency.
Pembroke manages Lloyd’s Syndicate 4000, Ironshore Europe Designated Activity Company and other related non-insurance entities.
The rating agency said that the rating consistency reflects Hamilton’s post-transaction risk-adjusted capitalisation, which is expected to continue to support AM Best’s opinion on Hamilton’s current risk-adjusted capitalisation.
AM Best believes that the new business will be accretive to Hamilton’s nominal operating performance and will introduce an earnings diversification benefit. Hamilton’s business profile also should benefit from the line of business and geographic diversification that will result from the substantial increase in new business. It is also expected that synergies will result from the integration of the companies. AM Best anticipates that enterprise risk management post-transaction close will continue at Hamilton’s current assessment of appropriate.
However, the rating agency added that uncertainty regarding the execution risk associated with a transaction of this relative size is inherent. Offsetting AM Best’s concern is the strength of Hamilton’s management team and corporate culture.
The transaction is expected to be completed in the fourth quarter of 2019 pending regulatory approval. According to AM Best Hamilton Re’s ratings can change in the near- or long-term if the terms and conditions of the deal change materially or the assumptions presented to the rating agency from Hamilton change materially. Hamilton Re’s ratings will be evaluated on an ongoing basis until the transaction concludes, at which time AM Best will conduct discussions with management regarding the final terms of the transaction and its impact on capitalisation, business profile, enterprise risk management and projected operating performance.