A.M. Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” of ICM Assurance (ICMA), based in Barbados.
The outlook of these credit ratings is stable.
The ratings reflect ICMA’s balance sheet strength, which A.M. Best categorised as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
ICMA is a single-parent captive insurer, wholly-owned by CNOOC International, which is in turn wholly-owned by CNOOC (CNOOC), the ultimate parent.
ICMA’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), is categorised as strongest, and A.M. Best expected it to remain at a similar level prospectively.
A.M. Best stated: “The balance sheet strength assessment also considers ICMA’s low underwriting leverage and strong liquidity measures. Due to the nature of the insurance ICMA provides for CNOOC’s oil and gas exploration, it carries a high gross loss potential and remains exposed to high severity events.”
However, A.M. Best noted that this risk is offset partially by extensive loss control and safety programs provided by CNOOC, which are intended to mitigate losses arising from the enterprise’s ordinary course of business. In addition, reinsurance protection is placed to limit ICMA’s net exposure to shock loss events.
“Also noteworthy is the significant percentage of assets that ICMA has loaned to its parent. These investments are liquid and repayable on-demand, so there is limited counterparty risk due to the affiliation of the two companies,” the rating firm added.
A.M. Best explained that ICMA has experienced adequate operating performance, with profitable results in periods absent of large underwriting losses.
While results on average have been sound over the most recent five years, there are occasional outsized losses that have caused volatility. Due to the absence of major catastrophe events, coupled with inherent business knowledge and loss control, the captive’s loss experience has remained favourable.
The business profile assessment of neutral is based upon the global liability and property coverages ICMA provides to its parent company and affiliates; and its appropriate ERM is driven by ICMA’s role as a single-parent captive of CNOOC, whose management incorporates ICMA as an element of its overall risk management and risk mitigation programme.
