LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Ascot Reinsurance Company Limited (Ascot Re) (Bermuda), Ascot Insurance Company (AIC) and Ascot Specialty Insurance Company (ASIC) (both headquartered in New York, NY). AIC and ASIC are collectively referred to as the Ascot Insurance U.S. Group (Ascot U.S.). The outlook of these Credit Ratings (ratings) is stable.
The ratings of Ascot Re and Ascot U.S. reflect the consolidated balance sheet strength of Ascot Group Limited (Ascot Group), which AM Best categorises as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. Ascot Re, established in late 2017, is considered to be strategically important to Ascot Group as an internal reinsurer and a platform for potential growth in the Bermuda reinsurance market. Ascot U.S., established in 2018, is viewed as strategically important for the group as a source for diversification and growth within the U.S. admitted lines market, and is supported by a net worth maintenance agreement with Ascot Group. Both divisions are fully integrated within the group’s operations and management.
Ascot Group is a property and specialty (re)insurance group, with 2018 gross written premiums (GWP) of USD 963 million. At present, the group’s business is sourced primarily via its flagship risk carrier, Lloyd’s Syndicate 1414 (Syndicate 1414), which is managed by Ascot Underwriting Limited. The group is led by an experienced and stable management team. Negative factors for the group’s business profile assessment include its significant concentration to property damage (in particular U.S. catastrophe risks), high product risk and competitive conditions in the group’s core markets.
The group’s balance sheet strength is underpinned by 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 the group’s sole shareholder, Canada Pension Plan Investment Board (CPPIB). Since acquiring Ascot Underwriting Holdings Ltd. in 2016, CPPIB has made several capital injections to support the group’s growth, demonstrating its ongoing commitment.
Ascot Group has a track record of robust underwriting performance, evidenced by Syndicate 1414’s five-year weighted average combined ratio of 94% (2014-2018), which was approximately five percentage points below the overall Lloyd’s market. However, the group generated a loss in 2018 due to higher expenses stemming from its investments in Ascot U.S. AM Best expects profitability to improve over the coming years, subject to sustainable growth from the group’s new undertakings in the United States and Bermuda. In particular, Ascot U.S. has been fully operational since May 2019, and is expected to deliver strong GWP growth in subsequent years.
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