Rating represents the risks of being a smaller player and the benefits of a diversified product offering

Credit rating agency Standard & Poor’s (S&P) has assigned Hyperion a B rating with a stable outlook.

The rating comes after the insurance group issued a $250m (£155.5m) term loan to pay off existing debt and acquire specialist underwriting agency PGI Commercial.

S&P said the B rating represented the risk associated with Hyperion being a smaller player in the market than its competitors, but also the benefits of its diverse product offering and customer base.

“We consider Hyperion’s business risk profile to be constrained by it being smaller than peers, having relatively lower profit margins, and running the implicit risk of losing key personnel. It is also limited by the highly fragmented, competitive, and cyclical industry in which it operates.

“These risks are partly offset by the group’s relatively diverse customer, product, and geographic base. Its good client retention record, ability to attract and retain top talent in the industry, and strong leadership are further mitigating factors.”

However, S&P also acknowledged that Hyperion could expect to benefit from organic growth over the coming years and said the rating may be upgraded if the group could demonstrate “consistent improvement” to profit margins and growth.