AM Best has affirmed the Financial Strength Ratings of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of Hamilton Re and Hamilton Insurance Designated Activity Company, each a subsidiary of Hamilton Insurance Group.
The outlook of these Credit Ratings remains stable.
AM Best says its ratings reflect Hamilton’s balance sheet strength, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Hamilton’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is at the strongest level.
AM Best expects the group’s risk-adjusted capital to remain at a supportive level in prospective years based on the current stress testing for COVID-19 estimated losses; expected stability in overall loss reserve development; improved underwriting results following the integration of recently acquired companies.
AM Best also expects that the group’s investment performance will revert to historical levels following the current global economic downturn.
Hamilton’s balance sheet strength assessment of very strong reflects its relatively high-risk investment strategy.
AM Best adds that Hamilton’s adequate operating performance has benefited from investment earnings that have outperformed peers on a historical basis, which is partially offset by underwriting losses.
Management has indicated that the substantial growth of gross premium from the acquisitions will act to absorb overhead expenses and generate a substantial improvement in Hamilton’s reported combined ratio.
Hamilton has experienced material adverse loss reserve development in its casualty lines of business over the past five years, a portion of which has recently been protected by an adverse loss reserve development contract and management’s non-renewal of underperforming accounts.
AM Best expects that the business written by the newly acquired platforms, in addition to the existing business written by Hamilton Re, will benefit the group’s business profile by increasing line of business and geographic diversification.
The company’s ERM practices are considered appropriate relative to the company’s risk profile.
