A.M. Best has upgraded the long-term issuer credit rating (ICR) to “a+” from “a” and affirmed the financial strength rating of A (Excellent) of PMG Assurance (PMG), which is based in Bermuda. The outlook of these credit ratings is stable. The ratings reflect PMG’s balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management. A.M. Best explains that the long-term ICR upgrade is a result of the rating enhancement provided to PMG by its ultimate parent, Sony Corporation (Sony). “PMG holds a strategic position as the captive insurance company for the Sony Group. It is a pure captive of Sony, and it serves a critical role in meeting certain global insurance requirements and providing risk management services to Sony group members,” A.M. Best adds. PMG writes predominantly commercial property and marine coverage for Sony and employee benefits coverage for Sony employees outside of Japan, as well as cyber coverage. A.M. Best states that PMG’s “strong operating results contribute to surplus growth, which enables the captive to maintain higher net retention levels on its marine business, and has enabled it to add lines of business such as cyber”. PMG’s balance sheet strength is assessed as very strong, as evidenced by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), excellent liquidity and conservative investment strategy. A.M. Best explains: “PMG’s operating performance continues to be strong, with favourable net income in four of the past five years driven predominantly by net underwriting income, and to a lesser extent, net investment income.” PMG’s strengths are derived from its underwriting focus, according to A.M. Best, which conservative operational strategy and emphasis on risk management controls, are integrated with those of its parent. “The captive is susceptible to volatility in earnings due to the low frequency and high severity losses it insures; however, PMG mitigates its exposures through the use of a comprehensive reinsurance programme,” A.M. Best concludes.
