Fitch assigns ratings to Ascot and operating subsidiaries
Fitch Ratings has assigned Bermudian-based Ascot Group Ltd an issuer default rating of ‘A-’ and a senior debt rating of ‘BBB+’.
In addition, Fitch has assigned Ascot’s core operating subsidiaries an insurer financial strength rating of ‘A+’ (Strong).
The rating outlook is stable.
Ascot is owned by the Canada Pension Plan Investment Board.
Fitch said key rating drivers included a one-notch CPP ownership positive uplift, Ascot’s moderate business profile, substantial and profitable premium growth, strong and improving earnings, favourable underwriting results, solid capitalisation and strong coverage.
Fitch said Ascot had net premiums written of $2.9 billion for 2023 and (Generally Accepted Accounting Principles) shareholders’ equity of $2.2 billion at September 30, 2024 (up 19.5 per cent in 9M24).
“Ascot has a broad global specialty product portfolio of property/casualty primary insurance and reinsurance business. Its 2023 gross premiums written split was 65 per cent insurance and 35 per cent reinsurance. Fitch favourably views this diversified source of revenues and earnings.”
The organisation added: “The company’s NPW has increased by $2.2 billion since 2018 (34 per cent compound annual growth rate), driven by Ascot’s business expansion into a Bermuda platform and US specialty insurance, as well as continued strong growth in its well established Lloyd’s franchise (global specialty segment), in a favourable underwriting market environment.
“While the company’s overall market position and business profile has improved with greater scale, Fitch views outsized growth cautiously until a profitable underwriting track record is established.
“Favourably, Ascot produced underwriting profitability in Bermuda specialty every year (and 9M24) after its first year of operations (2018), with the exception of 2022 due to Hurricane Ian losses.
“US specialty reported underwriting gains in 2023 and 9M24 after posting underwriting losses since launching in 2018 due to an elevated expense ratio as the business reached scale.
“Global specialty has consistently produced underwriting profitability, with moderate volatility, in its almost 25-year operating history, outperforming most Lloyd’s syndicates.”
Fitch said Ascot’s most recent five-year average (2019-2023) return on equity was 4.1 per cent. The company reported net income of $453 million in 2023 (27.6 per cent ROE) driven by increased underwriting income and investment income from higher interest rates and a larger invested asset base.
Ascot posted 9M24 net income of $326 million (21.2 per cent ROE).
Fitch said the company’s five-year average (2019-2023) combined ratio of 96.4 per cent was strong.
It added that Ascot posted a very strong combined ratio of 95 per cent in 9M24.
• For the full ratings press release, see Related Media
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