AM Best Revises Outlooks to Positive for Hagerty Reinsurance Limited and Drivers Edge Insurance Company

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)--
AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” (Excellent) of Hagerty Reinsurance Limited (Hagerty Re) (Hamilton, Bermuda) and its reinsured affiliate, Drivers Edge Insurance Company (Drivers Edge) (Littleton, CO). Hagerty Re and Drivers Edge are both wholly owned subsidiaries of Hagerty Insurance Holdings Inc.

The Credit Ratings (ratings) reflect Hagerty Re’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The strong balance sheet assessment reflects Hagerty Re’s favorable reserve trends and strong liquidity position. The positive outlooks reflect Hagerty Re’s improving risk-adjusted capitalization, driven by strong underwriting income and investment returns, which have generated significant organic surplus growth. While this trend has somewhat improved premium leverage, the improvement has been moderated by reduced third-party quota-share reinsurance cessions.

Previously, the investment portfolio was nearly entirely cash and cash equivalents. Though the investment portfolio remains conservative, diversification efforts in late 2024, has provided more robust investment income with only modest gains in portfolio risk.

AM Best views Hagerty Re’s operating performance as strong, with combined ratios consistently below personal auto peer averages, providing the company with ample operating income year over year. The company’s underwriting profitability is driven partially by Hagerty Re’s underwriting and valuation expertise, superior claims handling ability, with a vast network of collector vehicle repair experts, a special investigation unit to deter fraudulent activity and on-staff parts finders. Hagerty Re benefited from the more favorable yields on fixed-income and cash investments in 2024, and from the portfolio allocations previously mentioned in 2025.

AM Best views Hagerty Re’s business profile as neutral. Though the company is essentially a mono-line niche writer with a relatively small share of a larger auto market, Hagerty Re has strong name recognition within the enthusiast vehicle space. Additionally, Hagerty Re partners with the world’s largest auto insurers. These large primary insurers work with the company due to its unique expertise and data advantage, which relies heavily on partnerships with specialty auto shops and their ability to source replacement parts.

AM Best assesses Hagerty Re’s ERM as appropriate for its size and scope. The company monitors and manages its operating risks through its management processes, stress testing scenarios and robust risk mitigation plans to reduce losses when catastrophe activity is expected to occur. Hagerty Re’s reinsurance utilization is modest, but strategic, to create capital efficiency.

Drivers Edge benefits from a 100% quota share agreement with Hagerty Re, common ownership and the assignment of Hagerty Re’s managing general agents to generate business.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.