A.M. Best Affirms Credit Ratings of ICM Assurance Ltd
November 16 2018 - 3:18PM
Business Wire
A.M. Best has affirmed the Financial Strength Rating of
A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of
ICM Assurance Ltd (ICMA) (St. Michael, Barbados). The outlook of
these Credit Ratings (ratings) is stable.
The ratings reflect ICMA’s balance sheet strength, which A.M.
Best categorizes as strongest, as well as its adequate operating
performance, neutral business profile and appropriate enterprise
risk management.
ICMA is a single-parent captive insurer, wholly owned by CNOOC
International Limited, which is in turn wholly owned by CNOOC
Limited (CNOOC) [ADR-traded NYSE: CEO], ultimate parent.
The balance sheet strength is underpinned by its risk-adjusted
capitalization being at the strongest level, as measured by Best
Capital Adequacy Ratio (BCAR), generally favorable trend of
earnings, good liquidity and low underwriting leverage. 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
losses, is viewed as an offsetting element to the balance sheet
strength assessment, along with its 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, 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 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 evident in 2016 when
underwriting losses eroded the company’s capital and surplus by USD
21 million or 5%. The captive’s loss experience has remained
favorable due in part to no material catastrophe events, its
inherent knowledge of the business written 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.
The business profile assessment considers ICMA’s fundamental
role as a single-parent captive and the implied support provided by
its ultimate parent, whose management incorporates ICMA as a core
element of CNOOC’s overall risk management safety and risk
mitigation programs. 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 it writes.
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 a global rating agency and information provider
with a unique focus on the insurance industry. Visit
www.ambest.com for more information.
Copyright © 2018 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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version on businesswire.com: https://www.businesswire.com/news/home/20181116005496/en/
Alexander SarfoSenior Financial Analyst+1 908
439 2200, ext. 5779alexander.sarfo@ambest.comChristopher
SharkeyManager, Public Relations+1 908 439 2200, ext.
5159christopher.sharkey@ambest.comSusan
MolineuxAssociate Director+1 908 439 2200, ext.
5829susan.molineux@ambest.comJim PeavyDirector,
Public Relations+1 908 439 2200, ext.
5644james.peavy@ambest.com
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