A.M. Best has affirmed the financial strength rating of “A” (Excellent) and the issuer credit rating of “a+” of Blue Whale Re. The outlook for both ratings is stable.
The agency stated that the ratings reflect Blue Whale`s “strong capitalisation and conservative operating strategy”.
The ratings also consider the company`s critical and central role and favourable profile as part of the Pfizer Group, as well as the “excellent performance” of its operations.
Partially offsetting these positive rating factors are Blue Whale`s large gross and net underwriting exposures to property losses and its dependence on reinsurance.
Blue Whale is a single parent captive of Pfizer, a leading global pharmaceutical company. As Blue Whale reinsures Pfizer`s global property exposures, it plays an important role in Pfizer`s overall enterprise risk management and assumes a critical role in protecting the Pfizer Group`s assets.
As a result, Blue Whale benefits from Pfizer Group`s extensive risk management and loss control programmes.
The captive operates at what A.M. Best has called “conservative” underwriting leverage levels; however, it provides coverages with “extremely large limits”, and its gross exposures per loss occurrence are elevated.
Although Blue Whale benefits from reinsurance protection, its net retentions remain substantial. Reinsurance is provided by a large panel of reinsurers, and Blue Whale relies on significant capacity to be able to support its obligations. As such, it is heavily dependent on reinsurance.
Nevertheless, A.M. Best has recognised the quality of the reinsurers and the substantial financial resources and support available to the captive as part of the Pfizer Group.
The agency said that positive rating actions could occur if there is a sustainable and long-term improvement in the operating performance and capital strength of Blue Whale and Pfizer.
Conversely, negative rating actions could occur as a result of material operational and performance issues at both Blue Whale and Pfizer.
Rating pressure would also be “likely”, according to A.M. Best, if there were any adverse changes to many of the regulatory standards to which Pfizer adheres.
