AM Best Revises Outlooks to Positive, Affirms Credit Ratings to Hamilton Re, Ltd. and Hamilton Insurance Designated Activity Company
AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” (Excellent) of Hamilton Re, Ltd. (Hamilton Re) (Pembroke, Bermuda) and Hamilton Insurance Designated Activity Company (Dublin, Ireland), each a wholly owned subsidiary of Hamilton Insurance Group, Ltd. (Pembroke, Bermuda) (collectively referred to as Hamilton).
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The Credit Ratings (ratings) reflect Hamilton’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The very strong balance sheet strength assessment is supported by Hamilton’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Recent strategic shifts that have been executed by the company, including a transition toward a more diversified underwriting portfolio, have helped moderate the performance volatility that previously weighed on Hamilton’s balance sheet strength. However, Hamilton’s balance sheet strength assessment of very strong also reflects its relatively high-risk investment strategy on a portion of its invested assets, which is controlled by Two Sigma Investments, LP, an SEC-registered investment adviser.
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The operating performance assessment of adequate is supported by Hamilton’s investment returns and a favorable trend in underwriting results more recently, although the group has not yet achieved underwriting profitability. Underwriting improvements have stemmed from the group’s diversification efforts and the favorable rate environment, as well as the re-underwriting measures taken on the casualty book of business and the completed integration of the Pembroke acquisition. The business profile assessment of neutral is supported by Hamilton’s continued expansion of its diversified global insurance and reinsurance platform. Risk management capabilities are considered appropriate and in line with the group’s risk profile.
The positive outlooks reflect AM Best’s expectation that Hamilton will maintain its improving trend of profitability and continue generating earnings that are accretive to the group’s balance sheet strength. Positive rating actions could result if the group continues to display an improving trend of underwriting profitability, along with continued stable and accretive investment performance, thereby lessening the performance volatility that has weighed on the balance sheet strength assessment. The ratings could be affected negatively by turmoil in the capital markets that severely impacts the group’s risk-adjusted capitalization or investment performance.
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