A.M. Best Affirms Hiscox ‘A-‘ (Excellent) Rating

September 19, 2002

A.M. Best Co. announced that it has affirmed the A- (Excellent) financial strength rating of the U.K.’s Hiscox Insurance Company Limited (Hisco) with a stable outlook.

The London-based insurer, a wholly owned subsidiary of Lloyd’s insurer Hiscox plc, provides coverage to the general insurance market, specializing in high value household business and professional indemnity for service sector professions. Best’s bulletin cited its “excellent capitalisation and prospective financial performance, excellent business profile with leadership in certain specialist lines and experienced management team,” as the main factors it considered in its rating analysis.

The report said that offsetting factors include” the company’s disappointing investment return and high expense ratio.” The bulletin noted that “Hisco’s financial flexibility is enhanced by the financial support from its parent, as indicated by a GBP 20 million (USD 29.2 million) capital injection in December 2001.”

It went on to state that “Maintenance of the A- rating is predicated upon additional capital being made available to Hisco to support its expansion plans over the next two years.”

Best also noted that the the company’s combined ratio was an very low, 95.8% in 2001, due primarily to a low incidence of losses. The main area of concern cited in the report were both “the company’s own expenses and commissions paid to intermediaries, the expense ratio has remained persistently high at 43% in 2001,” said Best, although progress has been made in reducing them.

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