AM Best has affirmed the financial strength rating (FSR) of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent) for Hagerty Reinsurance Limited (Hagerty Re), based in Hamilton, Bermuda. The outlook for these ratings is stable.
The affirmed ratings for Hagerty Re reflect its balance sheet strength, assessed as strong by AM Best, as well as its strong operating performance, neutral business profile, and appropriate enterprise risk management (ERM).
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Hagerty Re’s strong balance sheet strength is supported by its risk-adjusted capitalization, as measured by AM Best. This is further reinforced by consistent reserve adequacy with favorable development trends, sufficient liquidity, financial flexibility, and a conservative investment strategy. The company’s risk-adjusted capitalization improved through 2024, and similar progress is anticipated in the coming years.
Drivers Edge, a newly rated subsidiary, benefits from a 100% quota share reinsurance agreement with Hagerty Re, shared ownership, and the assignment of Hagerty Re’s managing general agent to generate business. Underwriting operations at Drivers Edge have not yet begun.
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Hagerty Re’s operating performance has been assessed as strong. Its combined ratios have consistently outperformed personal auto peer averages, contributing to consistent operating income. The company’s profitability is supported by underwriting expertise, robust claims management processes, and partnerships with collector vehicle repair specialists.
These efforts are supplemented by its special investigation unit to combat fraud and its in-house parts sourcing team. While its investment portfolio was primarily allocated to low-yield cash at the end of 2023, Hagerty Re diversified its holdings to achieve higher yields in 2024.
AM Best regards Hagerty Re’s business profile as neutral. The company is a mono-line niche writer with a relatively small share of the larger market.
However, its strong brand recognition within the collector vehicle space and partnerships with major auto insurers distinguish it in the industry. These relationships are supported by Hagerty Re’s specialized data and operational expertise, as well as its extensive network of specialty auto repair shops and parts suppliers.
The stable outlook reflects AM Best’s expectation that Hagerty Re will continue to grow capital through underwriting profitability and improved investment income. These factors are anticipated to support the company’s ability to meet the capital demands of its expanding book of business while maintaining strong risk-adjusted capitalization.
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