Rembrandt Insurance Company has had its financial strength rating of A (Excellent) and its long-term issuer credit rating of “a” affirmed by A.M. Best.
Rembrandt is a captive insurer of Vitol Holding, a holding company of a group that principally trades petroleum-related products and commodities.
The ratings are reflective of Rembrandt’s “very strong” balance sheet strength, in addition to its strong operating performance, limited business profile, and appropriate risk management.
The balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio.
A.M. Best expects it the risk-adjusted capitalisation to remain at that level, supported by low net underwriting leverage and an outward reinsurance programme that is placed with a panel of financially strong reinsurers.
Partially offsetting factors in the balance sheet strength assessment include Rembrandt’s reliance on reinsurance and its concentrated asset base, with a loan provided by the captive to the Vitol group that represented 53 percent of the captive’s total assets at year-end 2017 (2016: 59 percent).
Mitigating the risks associated with this loan somewhat are the terms that allow it to be redeemed at short notice.
The captive’s strong operating performance is demonstrated by its five-year average return on capital of 13.2 percent, between 2013 and 2017, and is primarily driven by its excellent underwriting results, with a five-year average combined ratio of 15.7 percent over the same period.
Operating results are further supported by stable, albeit modest, investment returns.
The business profile assessment of limited reflects the company’s relatively small insurance portfolio, which is concentrated by product.
Approximately 90 percent of Rembrandt’s premiums derive from marine cargo and liability risks.
Over the past five years, the captive’s premium revenue has declined at an average annual rate of approximately 11 percent, adversely affected by the soft rate environment and low oil prices.
