AM Best has affirmed the Financial Strength Ratings (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” (Excellent) of Ascot Bermuda Limited (Ascot Bermuda) (Bermuda), as well as certain members of the Ascot Insurance U.S. Group (Ascot U.S.). (See below for detailed list). Concurrently, AM Best has affirmed the Long-Term Issue Credit Rating of “bbb+” (Good) on the USD 400 million, 4.25% fixed rate senior unsecured notes due 2030, issued by Ascot Group Limited (Ascot). The outlook of these Credit Ratings (ratings) is stable.
The ratings of Ascot Bermuda and Ascot U.S. reflect the consolidated balance sheet strength of Ascot, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). Additionally, Ascot receives rating enhancement from its parent, CPP Investments, which is considered to be of superior financial strength and supportive of Ascot’s strategy.
AM Best views Ascot Bermuda and Ascot U.S. as strategically important to Ascot; Ascot Bermuda is a platform for growth in Bermuda’s (re)insurance market, while Ascot U.S. is expected to become a source of diversification and growth within both the U.S. excess & surplus and admitted lines markets. Both are integrated fully within the group’s operations and management with Ascot U.S. supported by a net worth maintenance agreement.
Ascot is a property and specialty (re)insurance group, with 2022 gross written premium of USD 3.6 billion. Ascot U.S. and Ascot Bermuda increasingly provide diversification to this group’s underwriting portfolio, which has historically had a concentration in U.S. property risks. While expansion remains subject to moderate execution risk, Ascot has a stable and experienced management team that has been strengthened appropriately as its business has grown.
The group’s balance sheet strength is underpinned by its risk-adjusted capitalisation that AM Best expects to be maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by prudent capital management. The balance sheet strength assessment benefits from the excellent financial flexibility offered by CPP Investments. Since acquiring Ascot Underwriting Holdings Limited in 2016, CPP Investments has made several capital injections to support the group’s growth, demonstrating its ongoing commitment.
Ascot has a track record of good underwriting performance, demonstrated by Syndicate 1414’s five-year weighted average combined ratio of 92.5% over 2018-2022 (as calculated by AM Best), which was approximately 7.5 percentage points below the same metric for the overall Lloyd’s market. Despite generating an underwriting profit from its syndicate platform in 2022, Ascot reported consolidated underwriting loss of USD 33 million, compared with a profit of USD 30 million in 2021. This deterioration was driven by adverse prior year development. Ascot has taken steps to actively manage its retro property book, which was a significant contributor to adverse prior year development, and AM Best expects the group to return to a profitable underwriting trajectory in the short term, assisted by improved performance by Ascot U.S. Unrealised investment losses, as a result of interest rate increases, have additionally exacerbated the loss on an overall basis. AM Best expects these unrealised losses to have a transitory effect on the net result of Ascot and the group, as the company recovers these losses in the medium term.
The FSRs of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) for the following members (domiciled in New York, NY) of Ascot Insurance U.S. Group have been affirmed with a stable outlook:
- Ascot Insurance Company
- Ascot Specialty Insurance Company
- Ascot Surety & Casualty Company
The Long-Term ICRs have been upgraded to “a+” (Excellent) from “a” (Excellent) and the FSRs of A (Excellent) affirmed with stable outlooks, for the following members (domiciled in Ridgeland, MS) of Ascot Insurance U.S. Group due to a full rating enhancement from the lead rating unit Ascot Group Limited:
- AmFed National Insurance Company
- AmFed Casualty Insurance Company
- AmFed Advantage Insurance Company
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 Performance Assessments, 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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Stanislav Stoev, ACCA, CFA
Senior Financial Analyst
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