AM Best affirms the financial strength rating of ‘A’ (Excellent) and the long-term issuer credit rating of ‘a’ (Excellent) of Jupiter Insurance Limited, the Guernsey captive insurer of energy group BP. The outlook of the ratings is ‘stable’. The ratings reflect the captive’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. They also factor in a neutral impact from the ultimate parent. Balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects the captive’s BCAR scores to remain comfortably at that level, reflecting a strategy of maintaining sufficient capital buffers to absorb potential volatility from its exposure to high-severity, low-frequency losses. Jupiter purchases no outward reinsurance cover, in line with BP’s current strategy of retaining risks where possible. Partially offsetting the balance sheet strength assessment is a concentrated investment portfolio, of which 99 per cent is accounted for by short-term intragroup deposits. The captive has a track record of positive operating results, with a five-year weighted average return on equity of 9.4 per cent across 2021 to 2025. Earnings are supported by underwriting profits, evidenced by a weighted average combined ratio of 28.6 per cent, and supplemented by investment income. AM Best says prospective operating performance is subject to volatility, driven by the large line sizes the captive offers relative to its premium income. The neutral business profile assessment reflects Jupiter’s position within BP’s risk management framework as its principal captive insurer. Its underwriting risks consist mainly of onshore and offshore property damage and business interruption cover on BP assets globally.
