LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Humboldt Re Limited (Humboldt Re) (Guernsey). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Humboldt Re’s balance sheet strength, which AM Best categorises as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
Humboldt Re has generated mostly negative underwriting results in its short history of operation, having been impacted by catastrophe losses in 2017, 2018 and year-to September 2019 (as calculated by AM Best). These losses are reflective of the company’s business model and are within its risk appetites. AM Best expects Humboldt Re to generate positive technical performance in catastrophe benign years; however, should the company’s underwriting results not improve in the medium term, negative rating action is likely.
Humboldt Re’s balance sheet strength is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, conservative investment portfolio, good financial flexibility and a dynamic retrocession programme. The company’s risk-adjusted capitalisation is expected to decline at year-end 2019, due to an expected operating loss and higher underwriting risk requirements, but remain at the strongest level. Volatility in the company’s reserves relating to adverse development of catastrophe losses, is an offsetting factor in the balance sheet strength assessment.
Humboldt Re is a privately owned company based in Guernsey that provides short-tail property catastrophe and specialty lines reinsurance. The company derives its business using the origination capabilities of Credit Suisse’s Insurance-Linked Strategies team, a leading insurance-linked securities hedge fund. Humboldt Re’s ERM is considered appropriate given the size and complexity of its operations. Humboldt Re works with a range of reputable partners to support management of its catastrophe risk appetite, reinsurance purchasing strategy, investment allocation and access to distribution channels.
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