AM Best has affirmed the credit ratings of Bermudian-based Lancashire Holdings Ltd and its subsidiaries.

The ratings agency affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a+” (Excellent) of island-based Lancashire Insurance Company Ltd and Lancashire Insurance Company (UK) Ltd (collectively “Lancashire”).

Additionally, AM Best affirmed the long-term ICR of “bbb+” (Good) of the parent company, Lancashire Holdings Ltd.

The outlook of these credit ratings is stable.

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

Lancashire continues to maintain the strongest level of risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio. Its balance sheet strength is supported by solid levels of capital, which AM Best has assessed as strongest, as measured by BCAR.

The agency said: “The company actively manages capital and excess funds that are returned to shareholders. Financial flexibility, aided by the ability to raise capital, has allowed additional buffers as Lancashire continues to grow.

“Furthermore, initial reserves have consistently proved prudent, with releases over the years.

“Also reflected in the ratings is Lancashire’s historically strong overall operating performance, driven by underwriting results and complemented by investment and fee incomes.

“Combined ratios have improved over the last five years when compared to its peers, along with top line growth. This positive trend has benefited from benign catastrophic years and from the diversification of Lancashire’s lines of business, which have dampened volatility.

“Lancashire is a specialty underwriter with a broad degree of geographic presence and product line, with offerings that include primary insurance, reinsurance and retrocessional coverages written on a global basis through traditional capacity, Lloyd’s and its Kinesis platform.

“The group’s ERM is considered embedded and appropriate for Lancashire’s elevated risk profile.”