A.M. Best has upgraded the financial strength rating from A- (Excellent) to A (Excellent) and the long-term issuer credit rating from “a-” to “a” of PMG Assurance, the captive insurer for the Sony Group.
The outlook of the Bermuda-based captive’s credit ratings remains stable.
The ratings are reflective of PMG’s “very strong” balance sheet, in addition to its strong operating performance, limited business profile and appropriate enterprise risk management.
The balance sheet strength is evidenced by the captives risk-adjusted capitalisation, excellent liquidity, and conservative investment strategy.
The ratings also reflect PMG’s strategic position as the captive insurance company the Sony Group, whose ultimate parent is Sony Corporation.
A pure captive of Sony, PMG’s role is to meet certain global insurance requirements and provide risk management services to Sony Group members.
The upgrade in ratings is a response to Sony’s improved credit risk profile, which has experienced a positive trend over the past several years.
Sony has made upgrades in terms of its earnings quality, increased cash flow and a significant reduction to debt.
The captive’s strengths are derived from its underwriting focus, conservative operational strategy, and emphasis on risk management controls.
It primarily writes commercial property and marine for Sony, and employee benefits coverage for Sony employees.
PMG’s operating performance continues to be strong, with favourable net income in four of the past five years predominantly from net underwriting income.
Due to the low frequency and severity losses, it insures the captive is susceptible to volatility in earnings, however, it mitigates its exposures through the use of a comprehensive reinsurance programme.