A.M. Best has upgraded the long-term issuer credit ratings from “a” to “a+” and affirmed the financial strength rating (FSR) of A (Excellent) of Castle Harbour Insurance and Harrington Sound Insurance (referred to as the Captives).
The FSR of A (Excellent) and the long-term ICR of “a” of Colliers Bay Insurance were also affirmed by the ratings agency.
All three are captive insurers for Schlumberger, a worldwide provider of technology, integrate project management, and information solutions to customers working in the oil and gas industry.
The outlook of the Bermuda-based captives' credit ratings are stable.
The ratings of Castle Harbour and Harrington are reflective of their balance sheet strength, categorised as “strongest”, in addition to their strong operating performance, neutral business profile, and appropriate enterprise risk management (ERM).
Colliers’ ratings reflect its balance sheet strength, categorised as strongest, as well as its adequate operating performance, limited business, and appropriate ERM.
The ratings consider the Captives’ critical role as part of the parent company and their excellent operating performance during the last five years, providing tailored insurance for certain property and casual risks to subsidiaries of the parent.
The financial flexibility afforded to the captives by the well-rated parent is also recognised by the ratings agency.
The Captives’ management and corporate strategy are viewed as positive ratings factors by A.M. Best, given the group’s conservative underwriting, operational goals, and transparency.
ERM is appropriate due to the effect on its conservative risk culture, defined risk controls, and optimisation of the Captives’ capital and surplus.
Though they are single parent captives, the business profiles are assessed as neutral as each writes a broad scope of business and has significant geographic diversification.
Additionally, the Captives’ carry relatively large limits in their general liability and property lines of business.
Colliers’ ratings attributes are identical to the Captives’, however, this captive provides coverage for Schlumberger’s seismic acquisition risks.
This will no longer be necessary as Schlumberger is in the process of divesting the assets of WesternGeco Seismic Holdings, the subsidiary for which Colliers’ provided coverage.
As a run-off entity, it will have weaker operating performance over time and a finite business profile.
However, A.M. Best noted that the company will receive rating enhancement from its parent based on its role and integration within the parent’s organisation and the ratings agency’s expectation that management will continue to maintain the strongest level of capital in the captive to support any risks through the run-off period.
