A.M. Best Affirms Ratings of Hiscox Insurance Company, Inc.

A.M. Best has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a+” of Hiscox Insurance Company, Inc. (HICI) (Chicago, IL). The outlook for both ratings is stable.

These ratings are based upon A.M. Best’s criteria, “Rating Members of Insurance Groups,” and take into consideration the role and strategic importance of HICI to its Bermudian parent holding company, Hiscox Ltd. (Hiscox), and its overall U.S. strategy. The ratings also reflect the explicit support provided to HICI through substantial quota share reinsurance with an affiliate, Hiscox Insurance Company (Bermuda) Limited (Hiscox Bermuda) and a guarantee on all third-party reinsurance recoverables with Hiscox. The ratings also recognize the implied commitment from Hiscox that it will provide future support to HICI if needed.

HICI continues to maintain strong stand-alone capitalization, which is driven by low underwriting leverage and negligible investment leverage. A.M. Best will continue to monitor the operating performance of HICI going forward, given that its recent substantial premium and exposure growth has occurred during a period of competitive market conditions.

Positive rating actions for HICI are unlikely in the near term. Factors that may lead to negative rating actions include a material deterioration in the company’s risk-adjusted capitalization, significant weakening in its operating results, any negative rating actions taken on Hiscox Bermuda and/or any lessening of support (implied or explicit) provided to HICI by Hiscox.

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:

• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding BCAR for Property/Casualty Insurers

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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