A.M. Best has affirmed financial strength rating of “A- (Excellent)” and long-term issuer credit ratings “a-“ of BP’s captive Saturn Insurance, domiciled in Vermont.
According to A.M. Best, the ratings reflect the captive’s “excellent” risk-adjusted capitalisation and “good” operating performances since its incorporation in 2011.
The ratings agency predicts that Saturn’s risk-adjusted capitalisation will remain strong.
Saturn’s capital base has grown by 43 percent since 2011, with no dividends paid out in this period.
Going forward, A.M. Best expects Saturn to continue to “manage its risk-adjusted capitalisation at a strong level, although a decline from the current excellent level is likely, taking into account increases in underwriting risk over the medium term from new lines of business”.
Saturn writes large gross lines relative to the size of its capital base, as well as reinsurance with its sister company, Jupiter Insurance Limited, to protect its balance sheet against large losses.
A.M. Best also affirmed Jupiter Insurance's financial strength rating of "A (Excellent)" and its long-term issuer credit rating of “a”.
Saturn benefits from low investment risk with approximately half of its portfolio invested in cash and cash equivalents, while the remainder is composed of callable loans with a BP affiliate, with “excellent” liquidity terms.
In 2016, the captive’s underwriting performance remained strong, with a combined ratio of 40 percent.
