A.M. Best has affirmed the financial strength rating of “A-” (Excellent) and the issuer credit rating of “a-” of PMG Assurance, though the outlook for both ratings has been classified as “negative”.
The ratings reflect PMG’s excellent capitalisation, historically strong operating performance and strategic position as the captive insurance company for the Sony Group, whose ultimate parent is Sony Corporation.
PMG’s role is to meet certain global insurance requirements of Sony Group members.
Beginning in 2010, PMG did not renew nor participate in any form of non-related, third-party treaties.
PMG continues its operations, but with a strategic change in underwriting directed fully toward Sony-related business as a pure captive.
A.M. Best has stated that the company’s strengths are derived from its underwriting focus, long-standing customer relationships and conservative operating strategy.
PMG writes mostly proportional property and marine reinsurance business after ceasing to write life business on 16 January 2011.
Going forward, PMG has said that it expects to add a small amount of employee benefits coverage.
The company maintains a large exposure to earthquake-related losses in Japan due to its coverage of Sony’s risks.
Due to the nature of the relationship between PMG and Sony, the changes in Sony’s credit risk profile have put pressure on PMG’s ratings.
PMG’s success is reliant on Sony’s ability to support its credit risk profile, competitiveness and risk management.
A.M. Best commented: “The captive continues to be an integral component of Sony’s risk management platform. [Our] view of third-party credit ratings and market-based credit risk measures of Sony indicates negative rating pressure on PMG.”
Additionally, negative rating pressure might arise if there is any significant downward movement in Sony’s risk profile.
A.M. Best has claimed that any upward rating movement is predicated on improvement in Sony’s risk profile coupled with maintenance of PMG’s capital strength.
