AM Best Affirms Credit Ratings of Group Ark Insurance Limited

LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Group Ark Insurance Limited (GAIL) (Bermuda). GAIL is a wholly owned subsidiary of Ark Insurance Holdings Limited (Ark), the non-operating holding company of the Ark group. Concurrently, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) on GAIL’s outstanding rated instruments. The outlook of these Credit Ratings (ratings) is stable. See below for a detailed listing of Long-Term IR ratings.

The ratings reflect Ark’s consolidated balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). In addition, the ratings reflect GAIL’s strategic importance to Ark, as the group’s Bermuda-based (re)insurance vehicle. GAIL provides reinsurance to Ark’s corporate member at Lloyd’s and since 2021 writes third-party (re)insurance business, in line with the group’s scale-up business plan.

Ark is a property/casualty and specialty (re)insurance group, operating through an established Lloyd’s platform. Since 2021, Ark has been scaling up its Lloyd’s platform and underwriting third-party insurance and reinsurance business from Bermuda through GAIL. The group’s scale-up is supported by USD 605 million of capital from White Mountains Insurance Group, Ltd. (WTM), injected on 1 January 2021, and the issuance of USD 164 million of subordinated debt during 2021.

Ark’s balance sheet strength is underpinned by consolidated risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Ark’s risk-adjusted capitalisation is projected to remain at this level as the group executes its scale-up business plan, supported by good internal capital generation. The balance sheet strength assessment considers Ark’s prudent reserving, low risk investment portfolio, good financial flexibility and strong liquidity profile. A partially offsetting factor is the company’s material exposure to catastrophe risk, which AM Best expects to be managed through the appropriate use of reinsurance and robust exposure management.

The adequate operating performance assessment considers the group’s robust underwriting performance track record at Lloyd’s and execution of its scale-up business plan to date. AM Best expects Ark to maintain good technical return metrics over the underwriting cycle, notwithstanding the execution risk associated with its continued scale-up. In 2021, Ark reported a consolidated combined ratio of 90.9%, as calculated by AM Best. While the company’s profitability remains exposed to potential volatility from future catastrophe events, Ark’s recent underwriting performance has proven resilient to event losses. In addition, AM Best expects the group’s sound technical earnings to date in 2022 (combined ratio for the first nine months of 90.4%, as reported by Ark) to offset the negative impact of unrealised investment losses on Ark’s operating results for the year.

Ark’s neutral business profile assessment is reflective of its established profile at Lloyd’s, and its current and projected diversified underwriting portfolio. The group’s gross written premium reached USD 1.1 billion in 2021, compared with USD 596 million in 2020, indicating positive market acceptance of the scale-up. In line with its strategic plan, Ark has achieved further growth over 2022, with gross written premium reaching USD 1.3 billion for the first nine months of the year. Ark benefits from experienced and stable management and underwriting teams, which partially mitigates the execution risk associated with the material scale-up of its operations.

The following Long-Term IRs have been affirmed with a stable outlook:

Group Ark Insurance Limited—
-- “bbb+” (Good) on EUR 39.1 million floating rate subordinated notes, due 2041
-- “bbb+” (Good) on USD 47.0 million floating rate subordinated notes, due 2041
-- “bbb+” (Good) on USD 70.0 million floating rate subordinated notes, due 2041

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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