A.M. Best has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of Transmonde Services Insurance Company. The outlook for both ratings is stable.
The ratings reflect Transmonde’s historical strong operating performance, excellent risk-adjusted capitalisation and ability to generate net underwriting income and net income in recent years. These factors have allowed Transmonde to enhance its surplus considerably.
Partially offsetting these positive rating factors are Transmonde’s relatively high retentions and concentration in liability lines with significant loss severity potential.
An additional offsetting rating factor is its limited market profile as a single parent captive. Transmonde provides professional, general and pollution liability coverages to members of the International Association of Superintendents, which is a subsidiary of SGS SA—a publicly traded Swiss company.
Transmonde has maintained very conservative underwriting leverage ratios as surplus has consistently grown to support its business volumes. The company has posted low loss and loss adjustment expense ratios, reflecting SGS’s effective risk management.
The company’s relatively high per occurrence retentions are mitigated by significant deductibles and conservative reserving practices. The ratings recognise the company’s balance sheet strength and conservative underwriting leverage measures as well as its role as the captive insurance company of SGS.
While A.M. Best claims that Transmonde is well positioned at its current rating level, factors that may lead to negative rating actions include unfavourable operating profitability trends, outsized investment losses and a significant decline in its risk-adjusted capital that would not be supportive of its current rating level.
