Best’s News & Research Service - December 13, 2019 11:42 AM (EST)
AM Best Affirms Credit Ratings of Humboldt Re Limited
- December 13, 2019 11:42 AM (EST)
London //BestWire// - 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.
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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data provider specialising in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.