A.M. Best Affirms Credit Ratings of BNY Trade Insurance, Ltd. and The Hamilton Insurance Corp.

A.M. Best has affirmed the Financial Strength Ratings of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of BNY Trade Insurance, Ltd. (BNY Trade) (Hamilton, Bermuda) and The Hamilton Insurance Corp. (Hamilton) (Melville, NY). The outlook of these Credit Ratings (ratings) is stable.

The ratings of BNY Trade and Hamilton reflect each company’s strong risk-adjusted capitalization, consistently excellent operating performance, solid liquidity and conservative operating strategy.

Partially offsetting these positive rating factors are the companies’ limited market scope, business profile and product mix, as well as its dependence on third parties for processing, servicing and administration. Furthermore, the companies’ maintain relatively large (gross) underwriting exposure, as they offer high-gross insurance limits and insure bankers’ professional liabilities and excess all risk property with substantial insured values.

Additionally, the ratings recognize BNY Trade’s and Hamilton’s robust enterprise risk management (ERM) frameworks, as they follow the ERM practices of their ultimate parent, The Bank of New York Mellon Corporation (BNY Mellon) [NYSE:BK], a leading global financial services company. The ratings also recognize the companies’ excellent business position, as a result of their close ties to BNY Mellon.

BNY Trade and Hamilton provide comprehensive reinsurance coverage and products to their parent, BNY Mellon. BNY Trade and Hamilton benefit from BNY Mellon’s significant financial resources, as well as extensive risk mitigation and safety programs, which have been implemented throughout the organization.

As the companies fully cede certain assumed risks to the commercial market, their exposure to net underwriting losses is minimal in these instances. Furthermore, the associated credit risk is limited through the use of highly rated reinsurers. The companies’ projected operating results indicate favorable returns, and their aggregate surplus base of more than $1.4 billion is more than adequate to support their asset and credit risk exposures. While BNY Trade’s excess bankers’ professional program, and Hamilton’s excess all-risk cash and securities and excess all risk property coverages written offer significant insured values (considering the high coverage limits offered), the net impact of a full limit loss could strain the companies’ risk-adjusted capitalization. Nonetheless, this is mitigated by the historical fact that BNY Mellon has not experienced significant claims for these coverages in the layers insured by BNY Trade and Hamilton. Also, A.M. Best recognizes the low probability of such events, and the companies’ prospective risk-adjusted capitalizations are likely to remain strong, if these were to occur.

Negative rating actions could occur if there were a material shift from its risk profiles that potentially could undermine the stability of the ratings. Furthermore, negative rating actions could occur if there were any material shifts in ownership, strategy or significant changes in the company’s financial condition caused by a large catastrophe. In addition, negative rating actions could occur if there were financial issues resulting in rating pressure on the parent company, or deterioration on its credit profile could also impact the operating companies’ ratings.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. BestStephen Ruane, [phone], ext. 5431Senior Financial [e-mail] Davis, [phone], ext. [e-mail] Sharkey, [phone], ext. 5159Manager, Public [e-mail] Peavy, [phone], ext. 5644Director, Public [e-mail]