A.M. Best has affirmed the financial strength rating of “A- (Excellent)” and the long-term issuer credit rating of “a-” of Saturn Insurance, the captive of BP, an integrated global oil and gas company.
The ratings reflect Saturn’s balance sheet strength as well as its operating performance, limited business profile and appropriate enterprise risk management.
The ratings also consider rating lift from its reinsurer, Jupiter Insurance, which is the principal captive of the BP group and provides substantial reinsurance support to Saturn.
A.M. Best affirmed Jupiter’s rating of “A (Excellent)” and the long-term issuer credit rating of “a”, reflecting its strong operating performance, neutral business profile and appropriate enterprise risk management.
According to A.M. Best, Saturn benefits from low investment risk with approximately half of its assets invested in cash and cash equivalents. The remainder is composed of callable loans with a BP affiliate, with excellent liquidity terms.
The rating agency noted that Saturn achieved strong operating results during the period 2013 to 2016, however, a large workers’ compensation claim negatively impacted its performance last year, demonstrating its exposure to volatility.
Saturn’s strong performance track record has supported growth in capital and surplus of 43 percent since its incorporation in 2011, with no dividends paid out during this period.
The captive’s portfolio consists primarily of terrorism cover, certificate of financial responsibility, workers’ compensation insurance and environmental protection agency cover.
In addition, its premiums have been impacted negatively by the soft rate environment over the past three years, with its gross written premiums reducing by approximately 60 percent since 2014.
