Lancashire Insurance credit ratings upgraded by AM Best

Parent company's outlook also bolstered from negative to stable

Lancashire Insurance credit ratings upgraded by AM Best


By Kenneth Araullo

AM Best has revised the long-term issuer credit rating outlook of Bermudian-based reinsurance provider Lancashire Insurance Company Ltd and Lancashire Insurance Company (UK) Ltd to stable from negative.

Concurrently, the financial strength rating of A (Excellent) and the long-term issuer credit rating (ICR) of “a+” (Excellent) for both entities have been affirmed. The outlook for the financial strength rating (FSR) is also stable.

In a related assessment, AM Best has adjusted the outlook of Bermudian-based parent company, Lancashire Holdings Ltd, to stable from negative, while affirming its long-term ICR at “bbb+” (Good).

The revised credit ratings for Lancashire reflect its robust balance sheet strength, which AM Best categorizes as the strongest. Additionally, the ratings consider Lancashire’s consistent operating performance, its neutral business profile, and its effective enterprise risk management (ERM) strategies.

Lancashire’s balance sheet strength is notably supported by the highest level of risk-adjusted capitalization, as determined by Best’s Capital Adequacy Ratio. AM Best also acknowledged the group’s financial flexibility and a history of careful reserving practices contributing to this assessment.

The ratings further consider Lancashire’s historically solid overall operating performance. This performance is largely attributed to strong underwriting results in years not heavily impacted by catastrophes and is bolstered by investment income and fee income.

As of September 2023, Lancashire has demonstrated a robust operating performance, resuming trends observed in previous years. This performance, according to AM Best, has been instrumental in the revision of the negative outlook on the long-term ICR to stable. This stability is partly attributed to Lancashire’s diversification strategy, which has effectively mitigated volatility in underwriting results.

AM Best also recognizes Lancashire as a specialty underwriter with a considerable degree of both geographic and product line diversification. The company’s portfolio includes primary insurance, reinsurance, and retrocessional coverages, offered globally through various channels, including traditional capacity, Lloyd’s, and its Kinesis platform.

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