A.M. Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” of Rembrandt Insurance Company (Rembrandt), a Bermuda-based captive reinsurer of Vitol Holding B.V. (Vitol), a group engaged in the trading of petroleum-related products.
The outlook of these credit ratings is stable.
A.M. Best stated that these ratings reflect Rembrandt’s balance sheet strength, which it also categorised as very strong, as well as Rembrandt’s strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
Rembrandt’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR).
The captive’s risk-adjusted capitalisation is expected to remain at the strongest level, supported by low net underwriting leverage, an outward reinsurance programme that is placed with a panel of financially strong reinsurers and excellent internal capital generation.
A.M. Best explained: “Partly offsetting factors in the balance sheet strength assessment include the captive’s moderate reliance on reinsurance and its concentrated asset base, with a loan provided by Rembrandt to Vitol that represents approximately half of the captive’s total assets.”
“The risks associated with this loan are mitigated somewhat by terms that allow it to be redeemed on short notice, along with the good financial condition of Vitol itself,” the rating firm added.
A.M. Best outlined that Rembrandt’s “strong operating performance” is demonstrated by its five-year weighted average return-on-capital ratio of 13.2 percent and is “driven primarily by its good underwriting results”, with a five-year weighted average combined ratio of 36.0 percent over the same period.
Rembrandt’s operating results are further supported by stable, albeit modest, investment returns, according to A.M. Best.
The captive’s business profile assessment reflects the company’s concentrated insurance portfolio, with approximately 90 percent of its premiums derived from marine cargo and liability risks.
A.M. Best stated that they consider the captive’s ERM framework to be developed, and is embedded in Vitol’s risk management processes.
