A Social Security cost-of-living adjustment could have a small but positive impact on retirement planning.
A.M. Best Europe - Rating Services Limited has affirmed the financial strength rating (FSR) of A (Excellent) and upgraded the issuer credit rating (ICR) to "a+" from "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 FSR of A (Excellent) and ICR of "a+" of Lloyd's Syndicate 33 (United Kingdom), which is managed by Hiscox Syndicates Ltd (HSL), and affirmed the ICR of "bbb+" of Hiscox Ltd (Bermuda) (Hiscox), a parent holding company of the Hiscox group of companies. The outlook for all ratings is stable.
The upgrades to the ICRs of Hiscox Bermuda and Hisco reflect the strategic importance of both companies to the Hiscox group. Hiscox pursues a successful strategy of balancing volatile international catastrophe business with more stable local specialist business, which has supported profitable performance in each of the last five years. The role of Hiscox Bermuda in this strategy is to provide access to Bermudian property reinsurance business, which is very profitable in below average catastrophe years, but subject to considerable volatility. In contrast, Hisco provides access to UK and European local specialist business, which produces a stable earnings stream for the group. Each company has established a track record of good operating performance and has made a positive contribution to overall earnings during the last five years. Hiscox is expected to support the companies to the full extent of its financial strength. The upgrade to Hiscox Bermuda is also extended to Hiscox Guernsey, which cedes the majority of its premiums to Hiscox Bermuda.
Hiscox benefits from strong consolidated risk-adjusted capitalisation and good financial flexibility. The group has a good performance record, demonstrated by an average five-year combined ratio of approximately 90 percent. In 2011, the consolidated group's combined ratio was 101 percent, as exposure to the year's catastrophes within the group's substantial property reinsurance account were partly offset by earnings from non-affected lines, as well as a larger than usual reserve release. Performance is expected to improve in 2012, reflecting more benign claims experience to date.
Hiscox has a strong business profile in its core markets. It writes a well-diversified portfolio of London market business, including property and marine (re) insurance, which is balanced by specialist lines such as fine art, kidnap and ransom and high net worth home insurance. Business is written through a number of insurance subsidiaries and managed Lloyd's syndicates.
Hiscox Bermuda writes third party property reinsurance business and operates as an internal reinsurer within the Hiscox group. Hiscox Guernsey has a strong business profile as a specialist insurer of kidnap and ransom and fine art insurance and benefits from significant reinsurance support from Hiscox Bermuda. Hisco has a good business profile in the United Kingdom and continental Europe as an underwriter of high net worth household and certain specialist liability and commercial lines of business.
The group's flagship syndicate, Lloyd's Syndicate 33 has an excellent profile in the London market as a specialist underwriter of a diverse range of business classes. In addition to the support of Hiscox, the ratings of syndicate 33 reflect the underlying strength of the Lloyd's market. Hiscox's corporate member, Hiscox Dedicated Corporate Member (HDCM), provides 72.5 percent of the syndicate's capacity, while the remaining capacity is provided by Lloyd's names.
A factor that may lead to positive or negative rating actions for the syndicate is a change in the rating of the Lloyd's market, which currently has an FSR of A (Excellent) and an ICR of "a+" and has a stable outlook. Positive rating actions for the other Hiscox entities are unlikely in the near term, although sustained strong performance and strong risk-adjusted capitalisation could put positive pressure on the ratings longer term. Significant erosion of capital and/or weaker performance could put negative pressure on the ratings.
A.M. Best Company is an insurance rating and information source.
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