Global credit ratings agency AM Best has confirmed that it has revised the outlook to stable from negative for the Long-Term Issuer Credit Rating (Long-Term ICR), and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of Lancashire Insurance Company Limited (Hamilton, Bermuda) and Lancashire Insurance Company (UK) Limited (United Kingdom) – collectively referred to as Lancashire.
According to Best, the outlook of the FSR is stable.
At the same time, the agency has also revised the outlook to stable from negative and affirmed the Long-Term ICR of “bbb+” (Good) of the parent company, Lancashire Holdings Limited (Lancashire Holdings) (Hamilton, Bermuda).
Best stated that the ratings reflect Lancashire’s balance sheet strength, which the agency assesses as strongest.
Best also cited Lancashire’s strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Moreover, as measured by Best’s Capital Adequacy Ratio (BCAR), Lancashire maintains the strongest level of risk-adjusted capitalization.
As well as this, the assessment of balance sheet strength is supported by the group’s financial flexibility and history of prudent reserving.
Also reflected in Best’s ratings is Lancashire’s historically strong overall operating performance, which is driven by underwriting results in non-catastrophe-affected years and also complemented by investment income and fee income.
As of September 2023, Lancashire has exhibited a strong operating performance resuming prior years’ trends, which Best noted has led to this revision of the negative outlook on the Long-Term ICR to stable.
The agency highlighted how this reflects the dampening effect that its diversification strategy has on the volatility of its underwriting results.
