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 Hamilton Re Ltd.(Hamilton Re) (Bermuda), HamiltonSpecialty Insurance Co. (HSIC) (Wilmington, Delaware) and (HIC)(Wilmington, Delaware). The outlook of these Credit Ratings (ratings) isstable.
The ratings of Hamilton Re are based on its strongrisk-adjusted capitalization, the continued successful implementation of itsbusiness plan, acceptance in the marketplace and positive operating resultsstemming from both underwriting results and the performance of its investmentportfolio. The ratings also consider Hamilton Re's experienced management teamwith its proven track record and the solid enterprise risk management that isin place. The ratings of HSIC and HIC consider the aforementioned attributes,as well as implicit and explicit support from Hamilton Re.
Partially offsetting these positive rating factors are thestart-up nature of the company and the greater investment risk associated withits alternative investment strategy, as well as the continued competition andabundant capacity in the reinsurance marketplace. Also of concern is therelatively high gross investment leverage used by its investment manager, TwoSigma Investments (TSI). These risks could have an adverse effect on thecompany's risk-adjusted capital. However, these risks are mitigated by Hamilton'slow underwriting leverage and experienced underwriting team. The investmentleverage concerns are mitigated by the partially hedged nature of theportfolio, the large number of diversified liquid investments and TSI's lengthyinvestment track record, which includes substantial positive investment resultsthrough the recent market volatility.