A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of "a" of Ascot Reinsurance Company Limited (Ascot Re) (Bermuda). The outlook of these Credit Ratings (ratings) is stable.
The ratings of Ascot Re reflect the consolidated balance sheet strength of Ascot Group Limited (Ascot Group), which A.M. Best categorises as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. Ascot Re, established in late 2017, is considered strategically important to Ascot Group as an internal reinsurer and a platform for potential growth in Bermuda's reinsurance market. A.M. Best views the reinsurer as fully integrated into the group's operations and management.
Ascot Group is a relatively small-sized property and specialty (re)insurance group, with forecast 2018 gross written premiums of USD 914 million. At present, the business is sourced primarily via the group's flagship risk carrier, Lloyd's Syndicate 1414 (Syndicate 1414), which is managed by Ascot Underwriting Limited. The group is led by an experienced and stable management team. Negative factors for the group's business profile assessment include its significant concentration to U.S. catastrophe risks, high product risk and competitive conditions in the group's core markets.
The group's balance sheet strength is underpinned by risk-adjusted capitalisation that A.M. Best expects to be maintained at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR), supported by prudent capital management. The balance sheet strength assessment benefits from the excellent financial flexibility offered by the group's owner, Canada Pension Plan Investment Board (CPPIB). Since acquiring Ascot Underwriting Holdings Limited in 2016, CPPIB has made several capital injections to support the group's growth, demonstrating its ongoing commitment.
Ascot Group has a track record of robust underwriting performance, evidenced by Syndicate 1414's five-year weighted average combined ratio of 91% over the period 2013-2017, which was approximately five percentage points below the same metric for the overall Lloyd's market. However, performance is subject to volatility, due to the group's exposure to catastrophe losses. Return on capital is expected to be low over the short term, due to the large capital base relative to the group's underwriting book. A.M. Best expects adequate profitability over the medium term, subject to growth from the group's new undertakings in the United States and Bermuda.
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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