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A.M. Best Affirms Credit Ratings of Lancashire Holdings Limited and Its Subsidiaries

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A.M. Best Affirms Credit Ratings of Lancashire Holdings Limited and Its Subsidiaries

A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "a" of Lancashire Insurance Co. Ltd. (Hamilton, Bermuda) and Lancashire Insurance Co. (UK) Ltd. (United Kingdom) (collectively referred to as Lancashire). Additionally, A.M. Best has affirmed the Long-Term ICR of "bbb" and the Long-Term Issue Credit Ratings (Long-Term IR) of the parent company, Lancashire Holdings Ltd. (Lancashire Holdings) (Hamilton, Bermuda) [LSE: LRE]. The outlook for each of these Credit Ratings (rating) remains stable. (See below for a detailed listing of the Long-Term IRs)

The ratings reflect Lancashire's very strong balance sheet, strong operating performance, limited business profile and appropriate enterprise risk management (ERM) for the group's risk profile.

Lancashire's levels of risk-adjusted capitalization remain very strong even under stress scenarios. Balance sheet strength is further enhanced by the group's financial flexibility and history of consistent favorable reserve development, as well as its relatively modest underwriting leverage. Financial leverage and coverage metrics continue to be within tolerances for the group's rating level. Also reflected in the ratings are Lancashire's historically strong overall returns driven by excellent underwriting results and complimented by investment income and, to a lesser extent, fee income. The group's five-year average return on equity and combined ratio through year-end 2016 consistently have placed Lancashire at the high end of its peer group, particularly in non-catastrophe affected years. However, as demonstrated by recent events, Lancashire maintains an elevated risk profile and primarily writes lines of business that have significant exposures to catastrophe activity.

Source: A.M. Best Ratings Services, Inc. Used under license.