AM Best has affirmed the credit ratings of Bermudian-domiciled Harrington Re Ltd and Harrington Reinsurance Holdings Ltd.

The agency affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent) of Harrington Re Ltd (Harrington).

It also affirmed the long-term ICR of “bbb-” (Good) of Harrington Reinsurance Holdings Ltd.

The outlook of these credit ratings is stable.

The ratings reflect Harrington’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

AM Best said Harrington, which commenced operations in 2016, is sponsored by Axis Capital Holdings Ltd and The Blackstone Group Inc.

Harrington’s risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, was consistent with a strongest level assessment. Prospectively, AM Best expects Harrington’s BCAR scores to remain supportive of an overall balance sheet strength assessment of very strong.

The agency said the company employs an alternative asset strategy that has historically contributed to net income.

Harrington continues to build out a diversified, multiline reinsurance book of business with a focus on medium to longer-tailed casualty lines.

Currently, AM Best said, Harrington does not directly face the market and business is sourced through cessions from Axis. Harrington has a developed risk management function and also benefits from expertise and systems from both its sponsors.

The agency said negative rating action could occur if Harrington experiences significant adverse reserve development that impacts capitalisation.

Negative rating action could also occur if Harrington’s investment performance experiences significant downside volatility or if its risk-adjusted capitalisation declines materially.

Though unlikely in the near-term, positive rating action could occur from a long-term trend of favourable reserve development, AM Best said.