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AM Best Affirms Credit Ratings of Harrington Re Ltd. and Harrington Reinsurance Holdings Limited

BY Business Wire | CORPORATE | 12/05/24 04:36 PM EST

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of ?a-? (Excellent) of Harrington Re Ltd. (Harrington). AM Best also has affirmed the Long-Term ICR of ?bbb-? (Good) of Harrington Reinsurance Holdings Limited. Both companies are domiciled in Bermuda. The outlook of these Credit Ratings (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 Limited (AXIS) and The Blackstone Group Inc. Harrington?s risk-adjusted capitalization, as measured by Best?s Capital Adequacy Ratio (BCAR), was consistent with a strongest level assessment. The company redeemed its outstanding senior notes in 2024, positively impacting financial leverage. Prospectively, AM Best expects Harrington?s BCAR scores to remain supportive of an overall balance sheet strength assessment of very strong.

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 favorably to net income, which has been positive in most years. Harrington continues to build out a diversified, multiline 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.

Negative rating action could occur if Harrington experiences significant adverse reserve development that impacts capitalization. Negative rating action could also occur if Harrington?s investment performance experiences significant downside volatility or if its risk-adjusted capitalization declines materially. Though unlikely in the near-term, positive rating action could occur from a long-term trend of favorable reserve development.

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.

Copyright ? 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Source: AM Best

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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