AM Best revises the outlooks to ‘positive’ from stable and affirms the Financial Strength Rating (FSR) of ‘A-’ (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of ‘a-’ (Excellent) of Research Insurance Company Limited (RICL). RICL is the Bermuda-domiciled captive of Battelle Memorial Institute (BMI), an Ohio-based nonprofit corporation and research provider. The positive outlooks are driven by RICL’s favourable results, with five-year average combined and operating ratios that outperform those of AM Best’s commercial casualty composite. Consistent operating profits are attributable to favourable underwriting results, and to a greater extent, solid investment income in each of the past five years. RICL’s low loss experience is driven by conservative operations, including management’s disciplined underwriting philosophy and robust claims and risk management practices. Furthermore, RICL’s underwriting performance reflects the inherent benefits of being a captive insurer as it has minimal acquisition costs and administrative expenses, driving its lower-than-average expense ratio. The ratings also reflect RICL’s balance sheet strength, which AM Best assesses as very strong. This strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), along with a conservative investment risk profile and organic surplus growth achieved over the last five years. These factors are offset by the captive’s fluctuating retention relative to its surplus. AM Best assesses RICL’s business profile as limited, noting that it writes mainly claims-made products and errors and omissions, umbrella policies for general and employers’ liability, professional liability, and property flood deductible buy-down coverage for its parent and affiliated organisations. RICL is an integral component of BMI’s Enterprise Risk Management (ERM) program, providing specific insurance coverages more efficiently than the traditional market. This strategic role justifies a one-notch enhancement in the ratings from its ultimate parent, BMI, indicating a committed level of implicit and explicit support.
