Reinsurance News

AM Best lifts Spinnaker from review following Hippo acquisition

25th September 2020 - Author: Charlie Wood

AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Spinnaker Insurance Company.

am-best-logoThe outlook assigned to these Credit Ratings (ratings) is stable.

Spinnaker was previously put under review after it was announced the company was to be acquired by Insurtech firm Hippo, as well as discussions with management related to the organisation’s post-transaction capital structure.

AM Best says the new ratings reflect Spinnaker’s balance sheet strength, which it categories as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

In addition, Spinnaker’s rating affirmations are attributable to its strongest level of risk-adjusted capitalisation, a positive trend in operating performance and experienced management team.

The ratings also accounts for the financial and operational benefits that Spinnaker may receive as part of a larger organisation, including anticipated access to capital support and technology resources from Hippo.

Finally, the ratings recognise the equity-like characteristics of Hippo’s capitalisation with primarily convertible preferred stock.

Conversely, negative rating actions could occur if there is a material deterioration in Hippo’s balance sheet strength, operating performance or liquidity profile, including its ability to raise additional capital.

The stable outlook assigned to the ratings primarily reflects AM Best’s expectation that Spinnaker’s operating performance will remain profitable in the near term, and that its balance sheet strength will remain supportive of the current ratings level.

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