Hiscox retains A+ rating from AM Best
Bermuda-based re/insurer Hiscox has had its A+ financial strength rating affirmed by AM Best, which said it expects the company to continue its strong underlying performance despite suffering a net loss in 2022.
Hiscox, which is registered in Bermuda and operates Hiscox Re & ILS on the island in addition to re/insurance operations around the world, also received a stable outlook from the ratings agency. Its chief executive officer is Aki Hussein.
AM Best said: “Despite underwriting losses in 2019 and 2020, driven by COVID-19-related losses and reserve strengthening on certain lines of business, the group has a strong track record of earnings evidenced by a 10-year (2013-2022) weighted average combined ratio of 96% and a return-on-equity ratio of 7%.
“The group produced a combined ratio of 92% in 2022; however, unrealised investment losses led to a decline in profit after tax to $41.7 million from $189.5 million in 2021. The investment losses in 2022 were driven mainly by a rise in interest rates and largely reversed during the first six months of 2023 with a portion of the group’s investment portfolio reaching maturity.
“Strong underwriting performance and a rebound in investment performance resulted in the group reporting a robust profit after tax of $250 million for the first six months of 2023.”
AM Best said it expected the group’s underlying performance to remain strong over the short-to-medium term, supported by portfolio rebalancing and hardening rates in key lines.
The agency rated Hiscox’s balance sheet strength as very strong and praised its strong operating performance and “appropriate” enterprise risk management.
It said its balance sheet strength was underpinned by consolidated risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR).
“The balance sheet strength assessment also considers the group’s good financial flexibility and strong liquidity profile,” AM Best said. “The group has a prudent reserving strategy, demonstrated by a history of positive overall reserve development.”