OLDWICK, N.J.--(BUSINESS WIRE)--AM Best 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). The outlook of the FSR is stable. Additionally, AM Best has 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) [LSE: LRE].
The Credit Ratings (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 level 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. Also reflected in the ratings is Lancashire’s historically strong overall operating performance, driven by underwriting results in non-catastrophe-affected years and complemented by investment income and fee income. As of September 2023, Lancashire has exhibited a strong operating performance resuming prior years’ trends, which has led to this revision of the negative outlook on the Long-Term ICR to stable. This reflects the dampening effect that its diversification strategy has on the volatility of its underwriting results.
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. The group’s ERM is considered embedded and appropriate for Lancashire’s elevated risk profile.
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