A.M. Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent) for Inpex Insurance Ltd (IIL) (Bermuda). The outlook of these ratings has been revised from stable to positive as A.M. Best expects IIL (Bermuda) to maintain its peer-leading underwriting results, as well as steady revenue growth and favourable claims experience for the core product line. IIL is the single-parent captive of Inpex Corporation, which dominates Japan’s oil and gas exploration and production industry. The captive is responsible for underwriting energy operational risks across a geographically diverse insurance portfolio, covering property damage, third-party liability and extra expenses for Inpex. A.M. Best notes that the ratings reflect IIL’s “very strong” balance sheet, determined to be at the strongest level according to the Best Capital Adequacy Ratio (BCAR), as well as an adequate operating performance, neutral business profile and appropriate enterprise risk management. The rating agency highlights that IIL’s BCAR score improved throughout the previous year owing to higher retained earnings and lower business net retention. A.M. Best concludes that positive rating actions require IIL to maintain its very strong balance sheet strength and demonstrate further sustained favourable underwriting results. However, it notes that a “significant deterioration” in Inpex’s credit profile (such as operating profitability, financial leverage and interest coverage levels) could have a detrimental impact on the captive’s ratings.
