Affirms Ratings for Accelerant Holdings’ Subsidiaries
AM Best has assigned a Financial Strength Rating (FSR) of A- (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) to Accelerant Insurance Company of Canada (AIC) (Canada). The outlook for these Credit Ratings is stable. Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICRs of “a-” (Excellent) for Accelerant Insurance Europe SA (AIE) (Belgium), Accelerant Insurance UK Limited (AIUK) (United Kingdom), Accelerant Specialty Insurance Company (ASIC) (Little Rock, AR), Accelerant National Insurance Company (ANIC) (Wilmington, DE), and Accelerant Re (Cayman) Ltd. (Accelerant Re Cayman) (Cayman Islands). These companies are wholly owned subsidiaries of Accelerant Holdings (Accelerant), a non-operating holding company within the Accelerant group. The outlook for these ratings is also stable.
The ratings reflect the consolidated balance sheet strength of Accelerant, which AM Best assesses as very strong, as well as the group’s adequate operating performance, limited business profile, and appropriate enterprise risk management.
According to AM Best, AIE, AIUK, ASIC, ANIC, AIC, and Accelerant Re Cayman are strategically important and integrated within Accelerant. AIE, AIUK, ASIC, ANIC, and AIC play key roles in the group’s strategy of providing insurance capacity to managing general agents (MGAs) in the United Kingdom, the European Union, and North America. Accelerant Re Cayman is a reinsurer and is strategically important to the group’s reinsurance and capital management strategy. Accelerant’s licensed (re)insurance carriers benefit from net worth maintenance agreements with the holding company.
Established in 2019, Accelerant offers underwriting, claims handling, and analytical support to its MGA partners. In 2023, Accelerant reported gross written premiums of over USD 1.6 billion, supported by shareholders’ equity of over USD 300 million and senior debt of approximately USD 120 million as of December 2023.
Accelerant’s balance sheet strength is underpinned by consolidated risk-adjusted capitalisation expected to remain at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The balance sheet strength assessment also considers Accelerant’s good financial flexibility, low-risk investment portfolio, and strong liquidity profile. The group has a high dependence on reinsurance due to its strategy to retain a low level of underwriting risk. This associated credit risk is mitigated by the use of a diverse panel of financially strong counterparties along with good quality collateral.
The adequate operating performance assessment considers Accelerant’s business plan, taking into account heightened execution risk. Earnings are expected to be supported by steady fee-based income arising from the group’s risk exchange-related activities. Furthermore, AM Best expects the group to generate profitable underwriting returns over the longer term, reflective of the good historical performance of its MGA members. As Accelerant’s strategy has evolved, the group has incurred elevated one-off expenses that resulted in operating losses in recent years. Nevertheless, AM Best expects Accelerant to generate profitable overall results once the business is fully scaled.
