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A.M. Best Affirms Ratings of The Hamilton Insurance Corp.



  A.M. Best Affirms Ratings of The Hamilton Insurance Corp.

Business Wire

OLDWICK, N.J. -- October 26, 2012

A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and
issuer credit rating of “a+” of The Hamilton Insurance Corp. (Hamilton) (New
York, NY). The outlook for both ratings is stable.

The ratings reflect Hamilton’s excellent risk-adjusted capitalization, strong
liquidity and conservative operating strategy. Also inuring to Hamilton’s
ratings is the incorporation of a favorable business plan, which the
profitability and liquidity metrics of the ratings are based.

Partially offsetting these positive ratings factors is Hamilton’s short
operating history, limited market scope/business profile, product mix and
dependence on third parties for processing, servicing and administration.
Furthermore, somewhat offsetting these positive rating factors is the
company’s relatively large (gross) underwriting exposures as it offers high
gross insurance limits and execution risk associated with the implementation
of Hamilton’s business plan.

Additionally, the ratings recognize Hamilton’s excellent business position and
its relationship with its parent, The Bank of New York Mellon Corporation (BNY
Mellon) [NYSE: BK], a leading global financial services company. Hamilton
provides comprehensive re/insurance coverage/products to BNY Mellon. Hamilton
benefits from BNY Mellon’s robust enterprise risk management (ERM) framework
as it follows BNY Mellon’s ERM practices, financial resources, risk mitigation
and the safety programs implemented throughout the organization. Hamilton’s
projected operating results indicate favorable returns, and its surplus base
of over $1.2 billion is adequate to support its asset and credit risk
exposure. While the excess all risk cash and securities program and the
property coverages offer significant insured values (considering the high
coverage limits offered), the net impact of the credit risk could be
burdensome. Nonetheless, A.M. Best believes this is mitigated by the
historical fact that BNY Mellon has not experienced significant claims for
these coverages in the layers insured by Hamilton. Also, A.M. Best recognizes
the low probability of such events.

Hamilton has met A.M. Best’s stringent requirements for newer company
formations. The company’s ratings are a reflection of its ability to meet A.M.
Best’s onerous capitalization requirements, which mandate a more conservative
level of risk-based capital to support the company’s ratings.

Hamilton's ratings are not expected to be upgraded and its outlook revised
within the next year as the company's operating performance and capital
position have already been considered in the ratings process. Nonetheless, the
potential for negative rating actions could result if the company’s volatility
in operating performance exceeds A.M. Best's expectations and results in a
significant prolonged decline in its risk-adjusted capitalization. In
addition, deterioration in the credit profile of BNY Mellon could impact
Hamilton's ratings.

A.M. Best remains the leading rating agency of alternative risk transfer
entities, with more than 200 such vehicles rated in the United States and
throughout the world.

For current Best’s Credit Ratings and independent data on the captive and
alternative insurance market, please visit www.ambest.com/captive.

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Key criteria utilized include: “Risk Management and the Rating
Process for Insurance Companies”; “Alternative Risk Transfer (ART)”; “Rating
New Company Formations”; “Understanding BCAR for Property/Casualty Insurers”;
“Catastrophe Analysis in A.M. Best Ratings”; and “The Treatment of Terrorism
Risk in the Rating Evaluation.” Best’s Credit Rating Methodology can be found
at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most
authoritative insurance rating and information source. For more information,
visit www.ambest.com.

       Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contact:

A.M. Best Co.
Alexander Sarfo
Senior Financial Analyst
(908) 439-2200, ext. 5779
alexander.sarfo@ambest.com
or
Steven Chirico, CPA
Assistant Vice President
(908) 439-2200, ext. 5087
steven.chirico@ambest.com
or
Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
rachelle.morrow@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com
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