A.M. Best Affirms Ratings of Saturn Insurance Inc.
23 May 2015 - 12:30AM
Business Wire
A.M. Best has affirmed the financial strength rating of
A- (Excellent) and the issuer credit rating of “a-” of Saturn
Insurance Inc. (Saturn) (Burlington, VT). Saturn is a captive
of BP p.l.c. (BP) (United Kingdom), an integrated global oil
and gas company. The outlook for both ratings is stable.
The ratings reflect Saturn’s strong risk-adjusted capitalisation
and good financial performance over the last two years. In
addition, the ratings factor in BP’s financial strength and
commitment to Saturn.
Risk-adjusted capitalisation is expected to remain strong.
Internal capital generation is expected to support an increase in
underwritten risk over the medium term from new lines of business.
Saturn writes large gross line sizes relative to its balance sheet
size but comprehensive reinsurance with its sister company,
Jupiter Insurance Limited, protects its balance sheet.
Furthermore, Saturn benefits from low investment risk, with cash or
short term deposits representing about half of its investment
portfolio. The remainder comprises a deposit with BP, which has
excellent liquidity terms.
Saturn’s underwriting performance was strong in 2014,
demonstrated by a combined ratio of 29% (2013: 22%). Technical
performance benefited from benign claims experience, reflecting the
low-risk profile of the majority of its risks. The captive’s
importance to and integration within BP’s overall risk management
framework is a positive rating factor.
Further development of Saturn’s business profile, maintenance of
good technical performance and continued importance of the captive
to the BP group would likely lead to positive rating pressure.
Negative rating actions may arise from material deterioration in
Saturn's risk-adjusted capitalisation. In addition, a significant
increase in retention levels on Saturn’s current and planned
programmes without a commensurate increase in its capital base
would likely lead to a review of Saturn’s ratings.
A.M. Best remains the leading rating agency of alternative risk
transfer entities, with more than 200 such vehicles rated
throughout the world. For current Best’s Credit Ratings and
independent data on the captive and alternative risk transfer
insurance market, please visit www.ambest.com/captive.
The methodology used in determining these ratings is Best’s
Credit Rating Methodology, which provides a comprehensive
explanation of A.M. Best’s rating process and contains the
different rating criteria employed in the rating process. Best’s
Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Alternative Risk Transfer (ART)
- Catastrophe Analysis in A.M. Best
Ratings
- Evaluating Non-Insurance Ultimate
Parents
- Risk Management and the Rating Process
for Insurance Companies
- Understanding Universal BCAR
In accordance with Regulation (EC) No. 1060/2009, the
following is a link to required disclosures: A.M. Best
Europe - Rating Services Limited Supplementary
Disclosure.
This press release relates to rating(s) that have been
published on A.M. Best's website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please visit A.M.
Best’s Ratings & Criteria Center.
A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2015 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
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A.M. BestKonstantin Langowski, , +(44)
20-7397-0318Financial
Analystkonstantin.langowski@ambest.comorCatherine Thomas,
+(44) 20-7397-0281Director,
Analyticscatherine.thomas@ambest.comorChristopher Sharkey,
+(1) 908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy, +(1)
908-439-2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com