A.M. Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” of Transmonde Services Insurance Company.
The outlook of the Bermuda-based captive’s ratings remains stable.
The ratings are reflective of its “strongest” balance sheet, as well as its strong operating performance, limited business profile, and appropriate enterprise risk management.
Partially offsetting the rating factors are Transmonde’s high retentions and concentration in liability lines with significant loss severity potential, and its limited market profile as a single parent captive.
Transmonde provides professional, general and pollution liability coverages to members of the International Association of Superintendents, which are subsidiaries of SGS SA, a publicly traded Swiss company.
Surplus has remained strong to support its business volumes, which has caused the captive to maintain very conservative underwriting leverage ratios.
Surplus growth is historically the result of retained earnings from highly profitable operating results driven by excellent underwriting performance.
Transmonde has posted low loss and loss adjustment expense ratios, which reflect SGS’s effective risk management.
Its relatively high per-occurrence retentions are mitigated by significant deductibles and conservative reserving practices.
A material increase in the captive’s risk-adjusted capitalisation and consistently favourable operating results at SGS could lead to positive rating actions.
Negative rating actions may occur if there is sustained adverse global economic conditions affecting SGS and Transmonde, material loss of risk-adjusted capitalisation, deterioration of operating performance or an increase in net retention.