AM Best has affirmed the financial strength ratings of A (Excellent) and the long-term issuer credit ratings of “a+” (Excellent) of Bermudian-based Ascot Group Limited’s operating subsidiaries.

The ratings are in respect of Ascot Bermuda Limited, as well as three New York-headquartered organisations – Ascot Insurance Company, Ascot Specialty Insurance Company and Ascot Surety & Casualty Company.

Concurrently, AM Best has affirmed the FSR of A (Excellent) and the long-term ICR of “a” (Excellent) of AmFed National Insurance Company and its 100 per cent reinsured subsidiaries, AmFed Casualty Insurance Company and AmFed Advantage Insurance Company.

AM Best also has affirmed the long-term issue credit rating of “bbb+” (Good) of the $400 million, 4.25 per cent fixed rate senior unsecured notes due 2030, issued by Ascot Group Limited.

The outlook of these credit ratings is stable.

The ratings of Ascot Bermuda and Ascot US reflect the consolidated balance sheet strength of Ascot, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Additionally, Ascot receives rating enhancement from its parent, CPP Investments, which is considered to be of superior financial strength and supportive of Ascot’s strategy.

AM Best said it views Ascot Bermuda and Ascot US as strategically important to Ascot; Ascot Bermuda is a platform for growth in Bermuda’s re/insurance market, while Ascot US is expected to become a source of diversification and growth within the US E&S and admitted lines markets.

Both are integrated fully within the group’s operations and management with Ascot US supported by a net worth maintenance agreement.

The agency said Ascot is a property and specialty re/insurance group, with 2021 gross written premium of $2.8 billion.

Ascot US and Ascot Bermuda increasingly provide diversification to this group’s underwriting portfolio, which has historically had a concentration in US property risks. While expansion remains subject to moderate execution risk, Ascot has a stable and experienced management team that has been strengthened appropriately as its business has grown.

The group’s balance sheet strength is underpinned by its risk-adjusted capitalisation that AM Best expects to be maintained at the strongest level, as measured by Best’s capital adequacy ratio, supported by prudent capital management.

AM Best said the balance sheet strength assessment benefits from the excellent financial flexibility offered by CPP Investments. Since acquiring Ascot Underwriting Holdings Limited in 2016, CPP Investments has made several capital injections to support the group’s growth, demonstrating its ongoing commitment.

Ascot has a track record of good underwriting performance, demonstrated by Syndicate 1414’s five-year weighted average combined ratio of 94.4 per cent over 2017-2021, which was approximately 10 percentage points below the same metric for the overall Lloyd’s market.

In 2021, despite generating an underwriting profit, Ascot reported an overall loss of $30 million, compared with a profit of $150 million in 2020, driven by unrealised investment losses as a result of interest rate increases.

AM Best said it expects these unrealised losses to have a transitory effect on the net result of Ascot and the group to recover these losses in the medium term.

The ratings of AmFed reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM.

The ratings also consider, in the form of lift, the support it receives from Ascot, its parent company.

Ascot provides financial support through a net worth maintenance agreement and operational support that includes but is not limited to, investment, risk management, distribution and other back office functions.