AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” (Excellent) of GreenStars BNP Paribas S.A. (GreenStars) (Luxembourg), a subsidiary of BNP Paribas. The outlook of these Credit Ratings (ratings) is stable. The ratings reflect GreenStars’ 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. The ratings also consider AM Best’s expectation that BNP Paribas will provide financial support to the company, if needed. The shareholder has historically allowed GreenStars to retain all of its earnings since its incorporation in 2009. According to AM Best, GreenStars’ very strong balance sheet strength is supported by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects GreenStars’ risk-adjusted capitalisation to remain at the strongest level, supported by good internal capital generation and low net underwriting leverage. Although the associated credit risk is mitigated partially by GreenStars’ diversified and well-rated reinsurance panel, dependence on reinsurance is high. GreenStars’ strong operating performance is demonstrated by its return on capital and surplus of 18 per cent for the five-year period ending in 2021, as calculated by AM Best. AM Best’s report indicates that GreenStars’ historical performance has been driven largely by the company’s low loss experience, which has helped it obtain high inward ceding and profit commissions. AM Best expects prospective performance to remain strong, albeit subject to potential volatility stemming from weakened global macroeconomic conditions.
