AM Best Revises Issuer Credit Rating Outlook to Stable for Lancashire Holdings Limited and Its Subsidiaries; Affirms Credit Ratings

AM Best has revised the outlook to stable from negative for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of Lancashire Insurance Company Limited (Hamilton, Bermuda) and Lancashire Insurance Company (UK) Limited (United Kingdom) (collectively referred to as Lancashire). The outlook of the FSR is stable. Additionally, AM Best has revised the outlook to stable from negative and affirmed the Long-Term ICR of “bbb+” (Good) of the parent company, Lancashire Holdings Limited (Lancashire Holdings) (Hamilton, Bermuda) [LSE: LRE].

The Credit Ratings (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 (ERM).

Lancashire maintains the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). In addition to the strongest level of risk-adjusted capitalization, the assessment of balance sheet strength is supported by the group’s financial flexibility and history of prudent reserving. Also reflected in the ratings is Lancashire’s historically strong overall operating performance, driven by underwriting results in non-catastrophe-affected years and complemented by investment income and fee income. As of September 2023, Lancashire has exhibited a strong operating performance resuming prior years’ trends, which has led to this revision of the negative outlook on the Long-Term ICR to stable. This reflects the dampening effect that its diversification strategy has on the volatility of its underwriting results.

Lancashire is a specialty underwriter with a good degree of geographic and product line diversification, as the company’s offerings 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.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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