The ratings of Watford have been extended to WICE and WSIC based on their strategic role to Watford and the explicit and implicit support provided by Watford. WIC’s assigned ratings also recognize its strategic role to Watford and the explicit and implicit support provided by Watford.
Watford’s ratings are based on its strong risk-adjusted capitalization; experienced underwriting led by
Watford’s underwriting risk coupled with the leveraged alternative investment strategy creates an elevated risk profile that could expose Watford on the asset and liability sides of the balance sheet. However, the skilled underwriting of Arch Capital Group Ltd. and the experienced investment acumen of HPS, along with cash flows produced by Watford's credit investment strategy, will help partially mitigate these risks. Additionally,
Watford’s assets are managed by HPS, a
Key rating factors that could result in positive rating actions would be Watford meeting or exceeding its business plan over the long term, which includes consistently strong operating results while maintaining strong risk-adjusted capitalization. Negative rating actions could occur if Watford's operating performance is weak or inconsistent, if the company experiences large underwriting or investing losses or if risk-adjusted capitalization becomes strained.
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.
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