A.M. Best has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit rating of “a” of Beazley Insurance Company, Inc. (BICI), based in Farmington, Conn., a subsidiary of Beazley plc.
The outlook for both ratings is stable.
The ratings reflect BICI’s “solid stand-alone level of risk-adjusted capitalization as well as the extensive explicit support provided through quota share reinsurance agreements with Lloyd’s Syndicate 3623, which is managed by Beazley,” Best explained. “BICI also benefits from third party credit risk protection provided by Beazley. Given the explicit capital support that is in place, BICI receives partial rating enhancement.”
As a partial offsetting factor Best noted “the challenges BICI has faced in its initial years in operation while trying to establish itself in the very competitive specialty commercial insurance marketplace.”
Best’s report explained that these “challenges led to BICI falling short of its projected premium production and/or profitability targets in prior years. Subsequently, these adverse results contributed to the company discontinuing unprofitable product offerings to improve operating performance.”
Best indicated, however, that “despite these attenuating factors, BICI’s underwriting results have been on par with other specialty commercial insurers. BICI also maintains a quality balance sheet, which is reflective of Beazley’s conservative investment and reserving philosophies.”
In looking ahead Best said it “expects BICI to continue utilizing Beazley’s established underwriting strategies and principles as it continues to further its position as a leading specialty insurer in the United States.”
In conclusion Best indicated that while, it “does not expect positive rating actions in the near future, factors that could lead to these actions include a sustained improvement in BICI’s risk-adjusted capitalization and operating performance.
“Factors that could lead to negative rating actions include a material decline in the company’s risk-adjusted capitalization, a significant weakening of operating performance or a deterioration in its reserves.
“Furthermore, any upward or downward movement in the ratings of the Lloyd’s market, given its implications on Lloyd’s Syndicate 3623, or a perceived lessening of support provided by Beazley also would impact BICI’s ratings.
Source: A.M. Best