AM Best has assigned a Preliminary Credit Assessment (PCA) to Group Ark Insurance Limited (GAIL) (Bermuda) with a Financial Strength Assessment of A pca (Excellent) and a Long-Term Issuer Credit Assessment of "a" pca. GAIL is a wholly owned subsidiary of Ark Insurance Holdings Limited (Ark), the non-operating holding company of the Ark group. The outlook assigned to these PCAs is stable.
The PCAs reflect Ark’s consolidated balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM), and are based on the group’s five-year business plan. In addition, the PCAs reflect GAIL’s strategic importance to Ark. GAIL is the group’s Bermuda-based reinsurer, which provides reinsurance of the group’s Lloyd’s corporate member and will write third-party reinsurance business over the business plan period.
The Ark group is a property, casualty and specialty (re)insurance group, operating through an established Lloyd’s platform. Ark is seeking to scale up its existing platform at Lloyd’s and commence the underwriting of third-party reinsurance business from Bermuda through GAIL.
The very strong balance sheet strength assessment reflects Ark’s consolidated risk-adjusted capitalisation, which is projected to be above the minimum required for the strongest assessment over the five-year business plan, as measured by Best’s Capital Adequacy Ratio (BCAR). Capitalisation will be supported by a USD 605 million capital injection from White Mountains Insurance Group, Ltd., which also has committed to contribute up to an additional USD 200 million of equity capital to Ark in 2021. The Ark group will have material exposure to catastrophe risk, which is considered a partially offsetting factor, although AM Best expects this risk to be managed through the appropriate use of reinsurance and robust exposure management.
The adequate operating performance assessment considers the group’s five-year business plan, and Ark’s robust underwriting performance track record at Lloyd’s. AM Best expects Ark to maintain good technical return metrics over the underwriting cycle, notwithstanding the execution risk associated with its planned scale up.
Ark’s neutral business profile assessment is reflective of its profile at Lloyd’s, and its current and projected diversified underwriting portfolio. Ark benefits from experienced and stable management and underwriting teams, which serve to mitigate partially the execution risk associated with the material scale up of current operations.
AM Best expects Ark to appropriately leverage its established ERM framework within its current platform to support business plan execution over the coming years.
This press release relates to Preliminary Credit Assessments that have been published on AM Best’s website. For all assessment information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual assessments 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 and Assessment opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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