Ascot Bermuda expected to drive growth for parent company

Ascot Bermuda, led by Ian Thompson, and Ascot US are expected to be platforms for growth and diversification for Ascot Group, according to ratings agency AM Best.

The agency affirmed property and specialty re/insurers Ascot Bermuda and Ascot Insurance US’s financial strength ratings of A (Excellent). The outlook is stable.

“AM Best views Ascot Bermuda and Ascot U.S. as strategically important to Ascot; Ascot Bermuda is a platform for growth in Bermuda’s (re)insurance market, while Ascot US is expected to become a source of diversification and growth within both the US excess & surplus and admitted lines markets,” the agency said. “Both are integrated fully within the group’s operations and management with Ascot US supported by a net worth maintenance agreement.”

The agency noted that Ascot has gross written premium of $3.6 billion in 2022, adding: “Ascot US and Ascot Bermuda increasingly provide diversification to this group’s underwriting portfolio, which has historically had a concentration in US property risks.

“While expansion remains subject to moderate execution risk, Ascot has a stable and experienced management team that has been strengthened appropriately as its business has grown.

“The ratings of Ascot Bermuda and Ascot US reflect the consolidated balance sheet strength of Ascot, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). Additionally, Ascot receives rating enhancement from its parent, CPP Investments, which is considered to be of superior financial strength and supportive of Ascot’s strategy.”

AM Best noted that Ascot has a track record of good underwriting performance, demonstrated by Syndicate 1414’s five-year weighted average combined ratio of 92.5% over 2018-2022, which was approximately 7.5 percentage points below the same metric for the overall Lloyd’s market.

“Despite generating an underwriting profit from its syndicate platform in 2022, Ascot reported consolidated underwriting loss of USD 33 million, compared with a profit of USD 30 million in 2021,” it said.

“This deterioration was driven by adverse prior year development. Ascot has taken steps to actively manage its retro property book, which was a significant contributor to adverse prior year development, and AM Best expects the group to return to a profitable underwriting trajectory in the short term, assisted by improved performance by Ascot US.

“Unrealised investment losses, as a result of interest rate increases, have additionally exacerbated the loss on an overall basis. AM Best expects these unrealised losses to have a transitory effect on the net result of Ascot and the group, as the company recovers these losses in the medium term.”