A.M. Best Affirms Ratings of Lancashire Holdings Limited and Its Subsidiaries
03 September 2016 - 1:43AM
Business Wire
A.M. Best has affirmed the financial strength rating of A
(Excellent) and the issuer credit ratings (ICR) of “a” of
Lancashire Insurance Company Limited (Hamilton, Bermuda) and
Lancashire Insurance Company (UK) Limited (United Kingdom)
(collectively referred to as Lancashire). Additionally, A.M. Best
has affirmed the ICR of “bbb” and the issue ratings of the parent
company, Lancashire Holdings Limited (Lancashire Holdings)
(Hamilton, Bermuda) [LSE:LRE]. The outlook for each rating remains
stable. (See below for a detailed listing of the issue
ratings.)
Lancashire’s ratings reflect the group’s robust risk-adjusted
capitalization and excellent operating performance. Lancashire
continues to produce strong overall returns and underwriting
results that consistently outperform its peer group. The group’s
results are attributed to its experienced management team that has
tightly managed the underwriting cycle by keeping growth flat in
addition to prudent use of its retrocession program. The group’s
operating activities focus on a specialist approach to writing core
accounts and targeting dislocated classes of business.
Additionally, the ratings continue to reflect the group’s strong
and comprehensive enterprise risk management framework. This
customized risk management framework also has contributed to
Lancashire’s ability to consistently produce excellent underwriting
results and in turn to generate return measures at the high end of
the peer group.
Lancashire maintains good financial flexibility, with the
ability to access capital from equity and debt markets. In addition
to its traditional capacity provided through its Bermuda and London
operations, Lancashire benefits from its ownership of its
Lloyd’s platform, Cathedral Capital Limited and
Kinesis Capital Management Limited, Lancashire's special purpose
vehicle, which allows the group to provide additional capacity and
generate fee income.
Partially offsetting these positive rating factors are the
difficult current market conditions across most lines of business
written and the persistent low interest rate environment, making
the underwriting and investment environments that Lancashire
operates in very challenging and Lancashire’s exposure to
low-frequency, high-severity events due to its targeted lines of
business. Additionally, A.M. Best has some concerns regarding
recent personnel turnover over at Lancashire’s Cathedral
operations. However, given the group’s strong risk management and
underwriting acumen those changes are not expected to materially
impact Lancashire’s overall results.
The following issue ratings have been affirmed:
Lancashire Holdings Limited—
-- “bbb” on $130 million 5.7% senior unsecured notes, due
2022
-- “bbb-” on $97 million 3.7% over LIBOR subordinated notes, due
2035
This press release relates to rating(s) 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.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating
Services, Inc. ALL RIGHTS RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20160902005500/en/
A.M. BestScott Mangan, +1 908 439 2200, ext.
5593Senior Financial
Analystscott.mangan@ambest.comorGreg Reisner, +1 908
439 2200, ext. 5224Assistant Vice
Presidentgreg.reisner@ambest.comorChristopher
Sharkey, +1 908 439 2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
+1 908 439 2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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