AM Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating (ICR) of “a-” for Bermuda-based Harrington Re Ltd.
The long-term ICR of “bbb-” for Harrington Reinsurance Holdings Limited, the parent company, was also affirmed. Both ratings carry a stable outlook.
The affirmed 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 framework.
Harrington Re, which began operations in 2016, is sponsored by AXIS Capital Holdings Limited and The Blackstone Group Inc. AM Best noted that the company’s risk-adjusted capitalization, as measured by the Best’s Capital Adequacy Ratio (BCAR), remains consistent with a strongest level assessment.
The redemption of Harrington’s outstanding senior notes in 2024 positively impacted financial leverage. AM Best anticipates that Harrington’s BCAR scores will continue to support a balance sheet strength assessment of very strong.
While Harrington’s underwriting results have been near break-even or experienced modest losses in the past, its alternative asset strategy has contributed positively to net income, which has been favorable in most years. The company’s reinsurance portfolio includes a diversified, multiline book of business with a focus on medium- to long-tailed casualty lines.
Harrington’s business is currently sourced through cessions from AXIS rather than direct market placements. The company benefits from a developed risk management framework and leverages expertise and systems provided by its sponsors.
Potential negative rating actions could occur if Harrington faces significant adverse reserve development impacting capitalization, experiences substantial volatility in investment performance, or sees a material decline in its risk-adjusted capitalization.
Although unlikely in the near term, positive rating actions could result from a sustained trend of favorable reserve development.
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