OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” of Harrington Re Ltd. (Harrington). AM Best also has affirmed the Long-Term ICR of “bbb-” of Harrington Reinsurance Holdings Limited. Both companies are domiciled in Bermuda. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Harrington’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Harrington, which commenced operations in 2016, is sponsored by AXIS Capital Holdings Limited (AXIS) and The Blackstone Group Inc. (Blackstone). AXIS’ operating companies maintain an FSR of A+ (Superior) and a Long-Term ICR of “aa-” from AM Best. Blackstone was founded in 1985 and is a leading investment manager across a wide array of alternative asset strategies. Harrington seeks to leverage the strengths of both organizations’ expertise to generate strong overall returns.
Harrington continues to build out a diversified, multiline reinsurance book of business with a focus on medium to longer-tailed casualty lines and strict limitations on property catastrophe risk. Currently, Harrington does not directly face the market and business is sourced through cessions from AXIS. The investment portfolio is structured to have ample liquidity and diversification by asset class, while managing draw-down risk and seeking to provide strong absolute returns.
Given Harrington’s underwriting risk and alternative asset strategy, the company has a somewhat elevated risk profile with exposures to both the asset and liability sides of the balance sheet. However, Harrington continues to build its own independent risk management function but also benefits from expertise and systems from both its sponsors. Additionally, AM Best has stress-tested Harrington’s risk-adjusted capitalization for simultaneous adverse underwriting and investment events and it remains more than adequately capitalized under those current conditions.
Factors that could lead to positive rating actions for Harrington include meeting or exceeding its business plan over the long term, which includes consistently sustainable operating results while maintaining sufficient levels of risk-adjusted capitalization. Negative rating actions could occur if Harrington does not successfully execute its business plan over the long term, or experiences underwriting or investing losses outside of expectations, loss of key personnel or a material decline in risk-adjusted capitalization.
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