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FOR IMMEDIATE RELEASE
LONDON - NOVEMBER 22, 2017 01:37 PM (EST)
A.M. 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 rating affirmations reflect Humboldt Re’s balance sheet strength, which is categorised as very strong by A.M. Best, as well as its neutral business profile, adequate operating performance and appropriate enterprise risk management (ERM) framework.
Offsetting rating factors include the company’s underwriting concentration in natural catastrophe reinsurance and its high level of dependency on Credit Suisse’s Insurance-Linked Strategies team.
Humboldt Re is a privately owned start-up entity based in Guernsey that provides mainly short-tail property and specialty lines reinsurance. Since it started operating at the end of 2015, the company has derived all of its business solely using the origination capabilities of Credit Suisse’s Insurance-Linked Strategies team, a leading insurance-linked securities hedge fund, which had approximately USD 8.6 billion of assets under management.
During 2017, the company is projected to underwrite a globally diversified insurance portfolio producing more than CHF 240 million of gross written premiums, with a heavy bias toward catastrophe-exposed business lines. The company is anticipated to report a technical and operating loss for the year, driven by the third quarter hurricane losses in North America. As a result, A.M. Best expects Humboldt Re’s combined ratio for 2017 to be in excess of 130%, compared with combined ratio of 85% in 2016.
Humboldt Re’s balance sheet strength is very strong as a result of the strongest level of risk-adjusted capitalisation, a flexible retrocession programme focused on collateralised funds, which minimises counterparty credit risk, and a relatively conservative investment profile. Prospective balance sheet strength is expected to remain very strong as the company expands its portfolio.
Humboldt Re has developed an appropriate ERM framework, which centers on advanced modelling capabilities and flexible retrocession arrangements to manage underwriting risk. Due to its changing profile, the company also performs regular stress testing to ensure that its capital position remains supportive.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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 A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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