AM Best Affirms Credit Ratings of Lancashire Holdings Limited and Its Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” (Excellent) of Lancashire Insurance Company Limited (Hamilton, Bermuda) and Lancashire Insurance Company (UK) Limited (United Kingdom) (collectively referred to as Lancashire). Additionally, AM Best has affirmed the Long-Term ICR of “bbb+” (Good) of the parent company, Lancashire Holdings Limited (Hamilton, Bermuda). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Lancashire’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Lancashire continues to maintain the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Its balance sheet strength is supported by solid levels of capital, financial flexibility and favorable reserve development since inception. Lancashire benefits from having a publicly traded parent with access to both debt and equity markets, which provide financial flexibility. Lancashire has spent the past few years focusing on building a broader, more balanced business capable of navigating market cycles efficiently. This strategy has resulted in delivering more sustainable and less volatile returns, which is accretive to capital. Active capital management is at the core of how Lancashire manages its business, and this has resulted in consistently returning excess returns to its shareholders via dividends. Reserve development has been favorable every year since inception, which demonstrates the company’s conservative approach to risk. This practice continued after transitioning to IFRS 17 in 2023, with Lancashire being able to maintain healthy margins in its reserves.

The ratings also reflect Lancashire’s historically strong overall operating performance, driven by underwriting results and complemented by investment and fee incomes. Combined ratios have improved over the past five years when compared with its peers, along with top-line growth. This trend has benefited from benign catastrophe years and from the diversification of Lancashire’s lines of business, which have dampened volatility.

Lancashire’s neutral business profile assessment reflects its market position as a specialty underwriter with broad geographic presence and product lines, with offerings that include primary insurance, reinsurance and retrocessional coverage written on a global basis through traditional capacity, and Lloyd’s platform.

The group’s ERM is considered embedded and appropriate for Lancashire’s elevated risk profile.

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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