AM Best Affirms Credit Ratings of Palms Insurance Company, Limited and Palms Specialty Insurance Company, Inc.
June 20 2024 - 10:33AM
Business Wire
AM Best has affirmed the Financial Strength Rating (FSR)
of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term
ICR) of “a” (Excellent) of Palms Insurance Company, Limited (Palms)
(George Town, Cayman Islands). Concurrently, AM Best has affirmed
the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent)
of Palms Specialty Insurance Company, Inc. (Palms Specialty)
(Delaware). The outlook of these Credit Ratings (ratings) is
stable.
The ratings of Palms reflect its balance sheet strength, which
AM Best assesses as strongest, as well as its adequate operating
performance, neutral business profile and appropriate enterprise
risk management (ERM).
The ratings of Palms Specialty reflect its balance sheet
strength, which AM Best assesses as very strong, as well as its
adequate operating performance, limited business profile and
appropriate ERM.
Both companies are wholly owned by NextEra Energy Capital
Holdings, Inc. (NEECH), which, in turn, is wholly owned by NextEra
Energy, Inc. (NextEra) [NYSE: NEE]. Palms is a single-parent
captive, which underwrites insurance risks of NextEra and its
affiliates, providing specialized direct and assumed property,
casualty, workers’ compensation, automobile liability and
employers’ liability coverages. Palms Specialty, formed in 2022, is
a specialty insurer focusing on the U.S. excess and surplus lines
accounts, providing coverage for specialty property, professional
lines and other specialty lines with manageable gross limits within
the risk management structure of its parent.
The balance sheet assessment of strongest for Palms is supported
through its strongest level of risk-adjusted capitalization, as
measured by Best’s Capital Adequacy Ratio (BCAR). In addition,
Palms has grown its surplus each year during the past five years
through organic growth, allowing the captive to maintain sufficient
capital in supporting its ongoing obligations. The adequate
operating performance assessment reflects a five-year average for
both combined and operating ratios that outperform the captive
composite. Palms continues to generate favorable underwriting
results and benefits from its low underwriting expense structure as
a single parent captive.
The very strong balance sheet assessment is based on Palms
Specialty’s strongest risk-adjusted capitalization, as measured by
BCAR. AM Best expects that Palms Specialty will continue to
maintain supportive risk-adjusted capital levels throughout its
start-up phase. The adequate operating performance assessment is
based on the company’s favorable operating ratio since inception,
in addition to its clearly defined business plan and income
statement projections that contemplate a level of implementation
and execution risk for a newly formed entity. AM Best views Palms
Specialty’s business profile as limited, given the execution risk
associated with a start-up entity and the degree of competition in
its selected market. Negative rating action could occur if Palms
Specialty’s actual balance sheet strength or operating performance
materially differ to the downside from its initial business
plan.
Palms and Palms Specialty both benefit from the parent company’s
established and tested ERM framework and processes that continues
to evolve with further improvements tailored to both companies. The
ratings also reflect the role of Palms and Palms Specialty within
the risk management structure of its parent company.
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 use of Best’s Credit Ratings, Best’s Performance
Assessments, Best’s Preliminary Credit Assessments and AM Best
press releases, please view Guide to Proper Use of Best’s
Ratings & Assessments.
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.
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Chul Lee Senior Financial Analyst +1 908 882
2005 chul.lee@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Fred Eslami Associate Director +1 908 882
1759 fred.eslami@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com