A.M. Best Affirms Credit Ratings of ICM Assurance Ltd
November 21 2017 - 2:57PM
Business Wire
A.M. Best has affirmed the Financial Strength Rating of
A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of
ICM Assurance Ltd (ICMA) (St. Michael, Barbados). The
outlook of these Credit Ratings (ratings) is stable.
The rating affirmations reflect ICMA’s overall balance sheet
strength, which is categorized as strongest by A.M. Best,
underpinned by solid level of risk-adjusted capitalization,
favorable performance record, limited business profile and
appropriate risk management capabilities with a focus on sustaining
solid capitalization and underwriting performance, as well as
conservative balance sheet strategies. The ratings also consider
ICMA’s important role as a single-parent captive and the implied
support provided by its parent, CNOOC Limited (CNOOC)
[ADR-traded NYSE: CEO], whose management incorporates ICMA as a
core element of CNOOC’s overall risk management safety and risk
mitigation programs.
ICMA is a single-parent or pure captive insurer wholly owned by
CNOOC International Limited, which in turn is wholly owned by
CNOOC.
Partially offsetting these positive rating factors are ICMA’s
high gross loss potential due to the nature of the insurance
provided for oil and gas exploration, which is subject to high
severity and significant dependence on reinsurance. This is
tempered partially by the extensive loss control and group-wide
safety programs provided by its ultimate parent, which help
mitigate losses arising from its parent’s ordinary course of
business. Extensive reinsurance protection, placed with a panel of
financially strong reinsurers, also limits ICMA’s net exposure to
shock loss events. Also noteworthy is the significant percentage of
assets that ICMA has loaned to its parent. These investments are
very liquid and repayable on demand so there is limited
counterparty risk due to the affiliation of the two companies.
ICMA has generally reported consistently adequate operating
results. While favorable operating performance has been good in the
most recent five years, underwriting results are volatile and
susceptible to occasional outsized losses. This was evidenced in
2016 when ICMA recorded an underwriting loss of approximately USD
33 million, which eroded USD 21 million or 5% of the company’s
capital and surplus. The captive’s loss experience has remained
favorable due in part to no material catastrophe events, its
inherent knowledge of the business it underwrites and the strong
loss control programs adopted at the parent level. The risk
management team conducts periodic reviews of ICMA’s potential loss
exposures through an industrial risks specialist.
A.M. Best notes that despite its diversified business platform,
sustaining a trend of stable earnings is a challenge for ICMA due
to the nature of the business.
A.M. Best remains the leading rating agency of alternative risk
transfer entities, with more than 200 such vehicles rated in the
United States and 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.
This press release relates to Credit Ratings 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 see A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings. For information on the proper media use of Best’s
Credit Ratings and A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
####
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A.M. BestAlexander SarfoSenior Financial
Analyst+1 908 439 2200, ext.
5779alexander.sarfo@ambest.comorGary A.
DavisDirector+1 908 439 2200, ext.
5665gary.davis@ambest.comorChristopher
SharkeyManager, Public Relations+1 908 439 2200, ext.
5159christopher.sharkey@ambest.comorJim
PeavyDirector, Public Relations+1 908 439 2200, ext.
5644james.peavy@ambest.com
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