AM Best has affirmed the financial strength rating (FSR) of A (Excellent) and the long-term issuer credit rating (long-term ICR) of “a” (Excellent) of ICM Assurance Ltd (ICMA) (St. Michael, Barbados).
ICMA is a single-parent captive insurer, wholly owned by CNOOC International Limited, which is in turn wholly owned by CNOOC Limited (CNOOC), the ultimate parent.
The outlook of these credit ratings is stable.
The ratings reflect ICMA’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile, appropriate enterprise risk management, all of which are bolstered by rating enhancement that it receives from its ultimate parent, CNOOC.
According to AM Best, ICMA’s balance sheet strength is supported by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as its strong liquidity, low underwriting leverage and consistent reserving practices.
AM Best says that due to the nature of the insurance ICMA provides for CNOOC’s oil and gas exploration, it is subject to high severity losses. However, this exposure is tempered by the extensive loss control and group-wide safety programmes across the enterprise.
Reinsurance protection, placed with a panel of financially strong reinsurers, limits ICMA’s net exposure to shock losses.
The significant percentage of assets that ICMA loans to CNOOC. The loan is repayable on demand. It carries negligible counterparty risk due to the affiliation and aligned interests of the two companies, adds AM Best.
ICMA has reported ‘adequate’ operating results, with net operating profits recorded over each of the past five years. The neutral business profile assessment considers ICMA’s role as a single-parent captive providing global liability and property coverages to its ultimate parent and affiliates.
