By Business Wire, October 23, 2013, 02:01:00 PM EDT
OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best Co. has affirmed the financial strength rating of A
(Excellent) and issuer credit rating of "a+" of TheHamilton
Insurance Corp. (Hamilton) (New York, NY). The outlook for both
ratings is stable.
The ratings reflect Hamilton's excellent risk-adjusted capitalization,
strong liquidity and conservative operating strategy. Also inuring to
Hamilton's ratings is the incorporation of a favorable business plan,
which upon the profitability and liquidity metrics of the ratings is
Partially offsetting these positive ratings factors is Hamilton's short
operating history, limited market scope/business profile, product mix
and dependence on third parties for processing, servicing and
administration. Somewhat offsetting these positive rating factors is the
company's relatively large (gross) underwriting exposure as it offers
high gross insurance limits and execution risks associated with the
implementation of Hamilton's business plan.
Additionally, the ratings recognize Hamilton's excellent business
position and its relationship with its parent, The Bank of New York
Mellon Corporation (BNY Mellon) (NYSE:BK), a leading global
financial services company. Hamilton provides comprehensive reinsurance
coverages/products to BNY Mellon. Hamilton benefits from BNY Mellon's
robust enterprise risk management (ERM) framework as it follows ERM
practices, financial resources, risk mitigation and safety programs
implemented throughout the organization. Hamilton's projected operating
results indicate favorable returns, and its surplus base of over $1.3
billion is adequate to support its asset and credit risk exposures.
While the excess all risk cash and securities program and the property
coverages written offer significant insured values (considering the high
coverage limits offered), the net impact of the credit risk could be
burdensome. Nonetheless, this is mitigated by the historical fact that
BNY Mellon has not experienced significant claims for these coverages in
the layers insured by Hamilton. Also, A.M. Best recognizes the low
probability of such events. Nonetheless, A.M. Best will closely monitor
quarterly performance of Hamilton against its stated operating plan.
Hamilton's ratings and outlook are not expected to be upgraded within
the next 12 months as its operating performance and capital position
have already been considered in A.M. Best's ratings process.
Nonetheless, the potential for negative rating actions could result if
volatility in operating performance exceeds A.M. Best's expectations and
results in a significant prolonged decline in risk-adjusted
capitalization. In addition, deterioration in the credit profile of BNY
Mellon could impact Hamilton's ratings.
A.M. Best remains the leading rating agency of alternative risk transfer
entities, with more than 200 such vehicles rated in the United States
and throughout the world. For current Best's Credit Ratings and
independent data on the captive and alternative risk transfer insurance
market, please visit www.ambest.com/captive.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc.ALL RIGHTS
Source: A.M. Best Co.