AM Best has affirmed the credit ratings of Harrington Re Ltd and Harrington Reinsurance Holdings Ltd, both of which are domiciled in Bermuda.

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

AM Best also has affirmed the long-term ICR of “bbb-” (Good) of Harrington Re Holdings.

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.

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.

AM Best said the company redeemed its outstanding senior notes in 2024, positively impacting financial leverage.

Prospectively, AM Best said it expects Harrington’s BCAR scores to remain supportive of an overall balance sheet strength assessment of very strong.

The agency said: “Though Harrington’s underwriting performance has historically been near break-even or experienced modest losses, the company employs an alternative asset strategy that continues to contribute favourably to net income, which has been positive in most years.

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

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

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