A.M. Best has upgraded the issuer credit rating to “a+” from “a” and affirmed the financial strength rating of "A (Excellent)" of BNY Trade Insurance in Bermuda, due to a conservative operating strategy and robust enterprise risk management framework that it learnt from its parent, BNY Mellon.
Partially offsetting these positive rating factors are BNY Trade’s limited market scope, product mix and dependence on third parties for processing, servicing and administration. An additional offsetting rating factor is BNY Trade’s large (gross) underwriting exposure as it offers high gross insurance limits and insures excess bankers’ professional liabilities with substantial insured values.
BNY Trade provides reinsurance coverage and products to BNY Mellon. “The company’s reinsurance has been placed with the world’s significant providers and it benefits from BNY Mellon’s significant financial resources, extensive risk mitigation and the safety programmes, which have been implemented throughout the organisation,” said A.M. Best.
“As BNY Trade fully cedes assumed risk under primary bankers’ professional coverages to the commercial market, its exposure to net underwriting losses is minimal. BNY Trade’s projected operating results indicate favorable returns, and its surplus base of over $98 million is more than adequate to support the company’s asset and credit risk exposure.
“While BNY Trade’s excess bankers’ professional programme offers significant insured values (considering the high coverage limits offered), the net impact could be burdensome. Nevertheless, A.M. Best recognizes the low probability of such events.”
