The Hartford's Navigators downgraded on lack of scale and strategic direction

AM Best has downgraded the financial strength rating of UK-based Navigators International Insurance Company (NIIC) to A- from A, and revised its outlook to negative from stable.

The ratings agency said the move reflects Navigators' "continued lack of strategic direction". It noted "uncertainty" regarding the level of commitment from The Hartford, as well as "unclear" future strategic role within the wider group.

As a result, AM Best has revised its business profile assessment for Navigators to limited and lowered the level of lift that it receives from The Hartford as - "its importance to its ultimate parent has diminished".

Navigators' operating performance has been marginal since inception due to unexpectedly large claims and high start-up expenses relative to premium underwritten, it noted. AM Best expects prospective underwriting results to remain affected by the company’s lack of scale.

According to the agency, the insurer's risk-adjusted capitalisation improved to the strongest level at year-end 2019, as a result of a decrease in underwriting risk following the reorganisation of The Hartford group’s operations in Europe. The balance sheet strength assessment also considers its high quality investment portfolio and its comprehensive reinsurance protection.