A.M. Best Upgrades Issuer Credit Rating of Hiscox Group Subsidiaries

  A.M. Best Upgrades Issuer Credit Rating of Hiscox Group Subsidiaries

Business Wire

LONDON -- December 13, 2012

A.M. Best Europe – Rating Services Limited has affirmed the financial strength
rating (FSR) of A (Excellent) and upgraded the issuer credit rating (ICR) to
“a+” from “a” of Hiscox Insurance Company (Bermuda) Limited (Hiscox Bermuda),
Hiscox Insurance Company Limited (Hisco) (United Kingdom) and Hiscox Insurance
Company (Guernsey) Limited (Hiscox Guernsey). Concurrently, A.M. Best has
affirmed the FSR of A (Excellent) and ICR of “a+” of Lloyd’s Syndicate 33
(United Kingdom), which is managed by Hiscox Syndicates Ltd (HSL), and
affirmed the ICR of “bbb+” of Hiscox Ltd (Bermuda) (Hiscox), the ultimate
parent holding company of the Hiscox group of companies. The outlook for all
ratings is stable.

The upgrades to the ICRs of Hiscox Bermuda and Hisco reflect the strategic
importance of both companies to the Hiscox group. Hiscox pursues a successful
strategy of balancing volatile international catastrophe business with more
stable local specialist business, which has supported profitable performance
in each of the last five years. The role of Hiscox Bermuda in this strategy is
to provide access to Bermudian property reinsurance business, which is very
profitable in below average catastrophe years, but subject to considerable
volatility. In contrast, Hisco provides access to UK and European local
specialist business, which produces a stable earnings stream for the group.
Each company has established a track record of good operating performance and
has made a positive contribution to overall earnings during the last five
years. Hiscox is expected to support the companies to the full extent of its
financial strength. The upgrade to Hiscox Bermuda is also extended to Hiscox
Guernsey, which cedes the majority of its premiums to Hiscox Bermuda.

Hiscox benefits from strong consolidated risk-adjusted capitalisation and good
financial flexibility. The group has a good performance record, demonstrated
by an average five-year combined ratio of approximately 90%. In 2011, the
consolidated group’s combined ratio was 101%, as exposure to the year’s
catastrophes within the group’s substantial property reinsurance account were
partly offset by earnings from non-affected lines, as well as a larger than
usual reserve release. Performance is expected to improve in 2012, reflecting
more benign claims experience to date.

Hiscox has a strong business profile in its core markets. It writes a
well-diversified portfolio of London market business, including property and
marine (re) insurance, which is balanced by specialist lines such as fine art,
kidnap and ransom and high net worth home insurance. Business is written
through a number of insurance subsidiaries and managed Lloyd’s syndicates.

Hiscox Bermuda writes third party property reinsurance business and operates
as an internal reinsurer within the Hiscox group. Hiscox Guernsey has a strong
business profile as a specialist insurer of kidnap and ransom and fine art
insurance and benefits from significant reinsurance support from Hiscox
Bermuda. Hisco has a good business profile in the United Kingdom and
continental Europe as an underwriter of high net worth household and certain
specialist liability and commercial lines of business.

The group’s flagship syndicate, Lloyd’s Syndicate 33 has an excellent profile
in the London market as a specialist underwriter of a diverse range of
business classes. In addition to the support of Hiscox, the ratings of
syndicate 33 reflect the underlying strength of the Lloyd's market. Hiscox’s
corporate member, Hiscox Dedicated Corporate Member (HDCM), provides 72.5% of
the syndicate’s capacity, while the remaining capacity is provided by Lloyd’s

A factor that may lead to positive or negative rating actions for the
syndicate is a change in the rating of the Lloyd’s market, which currently has
an FSR of A (Excellent) and an ICR of “a+” and has a stable outlook. Positive
rating actions for the other Hiscox entities are unlikely in the near term,
although sustained strong performance and strong risk-adjusted capitalisation
could put positive pressure on the ratings longer term. Significant erosion of
capital and/or weaker performance could put negative pressure on the ratings.

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 utilised include: “Risk Management and the Rating
Process for Insurance Companies”; “Understanding BCAR for Property/Casualty
Insurers”; “Catastrophe Analysis in A.M. Best Ratings”; “Understanding
Universal BCAR”; “Rating Lloyd’s Syndicates”; “Rating Members of Insurance
Groups”; and “Insurance Holding Company and Debt Ratings”. Best’s Credit
Rating Methodology can be found at www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to
required disclosures: A.M. Best Europe - Rating Services Limited Supplementary

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best
Company. 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.


A.M. Best Company, Inc.
Mathilde Jakobsen, +(44) 20 7397 0266
Senior Financial Analyst
Catherine Thomas, +(44) 20 7397 0281
Director, Analytics
Rachelle Morrow, +(1) 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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