AM Best


A.M. Best Affirms Ratings of Hiscox Ltd and Its Subsidiaries


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Mathilde Jakobsen
Associate Director, Analytics
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mathilde.jakobsen@ambest.com

Catherine Thomas
Director, Analytics
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Christopher Sharkey
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Jim Peavy
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FOR IMMEDIATE RELEASE

LONDON - OCTOBER 23, 2014 10:45 AM (EDT)
A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of "a+" of Hiscox Insurance Company (Bermuda) Limited (Hiscox Bermuda), Hiscox Insurance Company Limited (Hisco) (United Kingdom) and Hiscox Insurance Company (Guernsey) Limited (Hiscox Guernsey). Concurrently, A.M. Best has affirmed the ICR of "bbb+" of Hiscox Ltd (Hiscox) (Bermuda), the ultimate parent holding company of the Hiscox group of companies. The outlook for the above ratings is stable.

A.M. Best has also affirmed the FSR of A (Excellent) and ICR of "a+" of Lloyd's Syndicate 33 (United Kingdom), which is managed by Hiscox Syndicates Limited (HSL). The outlook for both ratings remains positive.

At the same time, A.M. Best has affirmed the FSR of A (Excellent) and ICR of "a+" of Hiscox Insurance Company, Inc. (HICI) (Chicago, Illinois, USA). The outlook for both ratings is stable.

The ratings reflect the Hiscox group's strong consolidated risk-adjusted capitalisation and robust performance record, as demonstrated by an average five-year combined ratio of around 90%. Hiscox pursues a strategy of balancing volatile international catastrophe business with more stable local specialist business, which has supported its profitable performance in each of the past five years. Hiscox Bermuda and Hisco also have a strong performance record and strong stand-alone risk-adjusted capitalisation. The ratings of Hiscox Bermuda are extended to Hiscox Guernsey and HICI, which both receive explicit support from Hiscox Bermuda in the form of quota share reinsurance.

Positive rating factors are partially offset by the group's significant exposure to catastrophe losses, through its property reinsurance account in particular.

The ratings of Lloyd's Syndicate 33 reflect the underlying strength of the Lloyd's market, as well as the syndicate's strong performance record and enhanced financial flexibility from the support of Hiscox, which provides 72.5% of the syndicate's capacity through its corporate member.

Sustained strong performance and strong consolidated risk-adjusted capitalisation could put positive pressure on the ratings of the Hiscox entities over the longer term. However, significant erosion of capital or prolonged weak performance could put negative pressure on the ratings.

A factor that may lead to positive or negative rating actions for the syndicate is a change in the ratings of Lloyd's, which currently has an FSR of A (Excellent) and an ICR of "a+", both of which have a positive outlook.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

o Analyzing Insurance Holding Company Liquidity

o Catastrophe Analysis in A.M. Best Ratings

o Equity Credit for Hybrid Securities

o Insurance Holding Company and Debt Ratings

o Rating Members of Insurance Groups

o Rating Lloyd's Syndicates

o Risk Management and the Rating Process for Insurance Companies

o Understanding BCAR for Property/Casualty Insurers

o Understanding Universal BCAR

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

This rating announcement has been issued by A.M. Best Europe - Rating Services Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.


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