AM Best Affirms Credit Ratings of Lancashire Holdings Limited and Its Subsidiaries
AM Best has affirmed Lancashire Insurance's Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Ratings of 'a+' (Excellent). The parent company, Lancashire Holdings, received a Long-Term ICR of 'bbb+' (Good) with a stable outlook. These ratings reflect strong balance sheet strength, robust risk-adjusted capitalization, and effective enterprise risk management. Despite significant exposure to catastrophic activity, Lancashire showcases solid underwriting performance, financial flexibility, and proactive capital management.
- Affirmed Financial Strength Rating of A (Excellent) and Long-Term ICR of 'a+' (Excellent) for Lancashire.
- Strong risk-adjusted capitalization supported by Best's Capital Adequacy Ratio (BCAR).
- History of prudent reserving and financial flexibility enhances balance sheet strength.
- Demonstrates historically strong underwriting performance and effective enterprise risk management.
- Elevated risk profile due to significant exposure to catastrophe activity.
- Potential negative rating actions could arise from outsized insurance or investment losses.
The ratings reflect Lancashire’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Lancashire maintains the strongest levels of risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR). In addition to the strongest level of risk-adjusted capitalization, the assessment of balance sheet strength is supported by the group’s financial flexibility and history of prudent reserving. The group actively manages its capital and raised capital in 2020 to take advantage of favorable market opportunities. Also reflected in the ratings is Lancashire’s historically strong overall performance, driven by underwriting results in non-catastrophe affected years and complemented by investment income and fee income. Lancashire maintains an elevated risk profile, as it writes lines of business that have significant exposures to catastrophe activity. Lancashire is a specialty underwriter with a good degree of geographic and product line diversification, as the company’s offerings include primary insurance, reinsurance and retrocessional coverages written on a global basis through traditional capacity, Lloyd’s and its Kinesis platform.
In terms of ERM, Lancashire’s risk management function is embedded and customized across the entire organization, in line with the group’s elevated risk profile. The group’s historically strong underwriting results are demonstrative of its risk management capabilities.
Rating factors that could lead to a negative rating action include outsized insurance or investment losses, or a significant decline in risk-adjusted capitalization that would not be supportive of the current rating levels. A negative rating action could also occur if the group experiences a sustained trend of underwriting profitability results that are inconsistent with the current operating performance assessment.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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Source: AM Best
FAQ
What is Lancashire Insurance's current Financial Strength Rating as of October 2023?
What Long-Term Issuer Credit Rating does Lancashire Holdings Limited have?
What factors support the strong ratings of Lancashire Insurance?
What could lead to a negative rating action for Lancashire Insurance?
What is the outlook for Lancashire Insurance's ratings?
