GreenStars BNP Paribas, a subsidiary of BNP Paribas, has had its financial strength rating of A (Excellent) and its long-term issuer credit rating of “a+” affirmed by A.M. Best.
The outlook for the ratings remain stable.
The ratings are reflective of the subsidiary’s “strongest” balance sheet, in addition to its strong operating performance, neutral business profile and appropriate enterprise risk management.
GreenStars’ balance sheet strength is supported by risk-adjusted capitalisation at the strongest level, according to Best’s Capital Adequacy Ratio.
The ratings agency expects the risk-adjusted capitalisation to remain at this level, supported by good internal capital generation, modest growth and a low net underwriting leverage.
GreenStars’ balance sheet strength and financial flexibility also benefit from its affiliation with a financially strong ultimate parent, BNP Paribas.
The shareholder has allowed the subsidiary to retain 100 percent of its earnings since its incorporation in 2009.
The company’s high reliance on reinsurance remains an offsetting factor, however, this is mitigated partly by its diversified panel of financially strong reinsurers.
GreenStars’ strong operating performance is demonstrated by its five-year average return on capital and surplus of 17.4 percent, driven by the captive’s low loss experience which helps it to obtain high inwards ceding and profit commissions.
Performance over a longer term period is subject to volatility due to the company’s exposure to a possible accumulation of losses and to the impact of fluctuations in reinsurance market conditions.
The potential aggregation of losses is partially mitigated by the company by purchasing extensive reinsurance.
GreenStars provides support for BNP Paribas’ lending operations as a credit-risk management tool and its business profile benefits from having direct access to the group’s good quality credit risks.
The subsidiary is concentrated in credit insurance, however, its business profile assessment reflects its diversification by geography, type of credit risk and obligor.
