AMSTERDAM--(BUSINESS WIRE)--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 captive subsidiary of BNP Paribas SA (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, in the form of rating lift, AM Best’s expectation that BNP Paribas will provide financial support to GreenStars, if needed. The shareholder has historically allowed GreenStars to retain all of its earnings since its incorporation in 2009.
GreenStars’ very strong balance sheet strength assessment 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. The company’s dependence on reinsurance is high, although the associated credit risk is mitigated partially by its diversified and well-rated reinsurance panel.
GreenStars’ strong operating performance is demonstrated by its return on capital and surplus of 16.6% for the five-year period ending in 2023, as calculated by AM Best. 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 the company’s prospective performance to remain strong, albeit subject to potential volatility stemming from changing global macroeconomic conditions. GreenStars’ extensive reinsurance programme helps to mitigate the effect of potential claims volatility on a net basis.
GreenStars provides support for BNP Paribas’ lending operations, as a credit-risk management tool. The company’s business profile benefits from having direct access to the group’s good quality credit risks. While GreenStars is concentrated in credit insurance, its business profile assessment reflects its diversification by geography, type of credit risk and obligor.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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