A.M. Best has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of "a-" of Saturn Insurance of Burlington, Vermont. Saturn is a captive of BP, an integrated global oil and gas company.
The outlook for both ratings is stable.
Saturn's ratings reflect its strong risk-adjusted capitalisation resulting from excellent group reinsurance support and the full retention of after-tax profits.
Saturn benefits from low investment risk as it maintains half of its investments in cash or short term deposits, with the remainder loaned back to BP with excellent liquidity conditions.
In addition, the ratings also factor in BP's financial strength and commitment toward Saturn.
Saturn's strong risk-adjusted capitalisation supports the company's developing business profile and is able to absorb an increase in underwriting risk. Going forward, it is expected that the company will gradually increase its net risk retention and accept new lines of business.
In addition, Saturn benefits from a comprehensive reinsurance agreement with its sister company, Jupiter Insurance.
The importance and integration of the company in BP's overall risk management framework is also positively reflected in the ratings. In addition, BP's financial strength and commitment toward Saturn is similarly assessed as a positive rating factor.
Upward rating movements are unlikely at present.
Negative rating actions may arise from a material deterioration of Saturn's risk-adjusted capitalisation. In addition, a significant increase in the retention levels on Saturn's current and planned programmes without a commensurate increase in the capital base would likely lead to a review of Saturn's ratings.
