AM Best Affirms Credit Ratings of Palms Insurance Company, Limited
May 14 2021 - 1:01PM
Business Wire
AM Best has affirmed the Financial Strength Rating of A
(Excellent) and the Long-Term Issuer Credit Rating of “a”
(Excellent) of Palms Insurance Company, Limited (Palms) (George
Town, Cayman Islands). The outlook of these Credit Ratings
(ratings) is stable.
The ratings reflect Palms’ balance sheet strength, which AM Best
assesses as strongest, as well as its adequate operating
performance, neutral business profile and appropriate enterprise
risk management.
The ratings reflect Palms’ solid risk-adjusted capitalization,
as measured by Best’s Capital Adequacy Ratio (BCAR), consistent
positive operating performance and conservative balance sheet
strategies, as well as its strong management and significant role
within the risk management structure of its parent, NextEra Energy
Capital Holdings, Inc. (NEECH). The ratings also recognize Palms’
history of maintaining sufficient capital and financial resources
to support its ongoing obligations.
Palms currently provides coverage primarily for the energy and
utility industry and has high net loss potential stemming from a
single, severe occurrence relative to its surplus. This is
mitigated somewhat by the company’s excellent loss history,
favorable geographic spread of risk and Palms’ historically strong
surplus position. Additionally, while Palms depends on third
parties for processing, servicing and administration, Palms’
management is involved closely in these operations.
Palms is a single-parent insurer wholly owned by NEECH, which in
turn is wholly owned by NextEra Energy, Inc. (NEE) [NYSE: NEE].
Palms currently primarily accepts insurance risks from NEE and its
affiliates, providing specialized direct and assumed property,
casualty coverages, workers’ compensation, automobile liability,
employers’ liability. Effective January 2021, Palms also provides
coverage to non-affiliated entities. Palms has expanded and
enhanced its underwriting structure with necessary talent and
expertise to support the expansion into third-party business.
Although Palms participates in a range of coverages of its parent
company for very large risks, these risks are underwritten with
tight guidelines and significant loss control measures by the
insured affiliates, as evidenced by favorable loss ratios over the
past five years. Nonetheless, prospective underwriting performance
remains subject to volatility, due to Palms’ exposure to low
frequency, high severity claims in its property program, which
includes coverage for NEE’s renewable energy interests and the
newer third-party coverage.
AM 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 AM 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 AM Best’s Recent Rating
Activity web page. For additional information regarding the use and
limitations of Credit Rating opinions, please view Guide to Best’s
Credit Ratings. For information on the proper media use of Best’s
Credit Ratings and AM Best press releases, please view Guide for
Media - Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
Copyright © 2021 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Fred Eslami Associate Director +1 908 439 2200,
ext. 5406 fred.eslami@ambest.com
Susan Molineux Director +1 908 439 2200, ext.
5829 susan.molineux@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Jim Peavy Director, Communications +1 908 439
2200, ext. 5644 james.peavy@ambest.com
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