OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a” (Excellent) of ICM Assurance Ltd (ICMA) (St. Michael, Barbados). ICMA is a single-parent captive insurer, wholly owned by CNOOC International Limited, which is in turn wholly owned by CNOOC Limited (CNOOC), the ultimate parent. The outlook of the FSR is stable.
These Credit Ratings (ratings) reflect ICMA’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM), augmented by rating enhancement that it receives from its ultimate parent, CNOOC.
The outlook revision to positive from stable for the Long-Term ICR reflects ICMA’s favorable results, with significant net operating profits recorded over the past five years. The captive’s loss experience compares favorably with peers and the overall industry due to strong loss control programs adopted across the enterprise; management's knowledge of the business; and the absence of material catastrophic events. The captive’s earnings also benefit from ICMA’s inherently low expense structure and are further enhanced by favorable loss reserve development. Prospectively, AM Best expects ICMA will continue to outperform its peers on key operating metrics.
ICMA’s balance sheet strength assessment is underpinned by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as its favorable liquidity and low underwriting leverage measures. Although the nature of ICMA’s coverage subjects it to shock loss and high severity events, this exposure is tempered by reinsurance protection and group-wide safety and risk mitigation protocol. Also noteworthy is the significant percentage of assets that ICMA has loaned to its parent. However, the loan is repayable on demand with limited counterparty risk due to the affiliation and the aligned interests of the companies.
ICMA’s business profile assessment of neutral is based upon the global liability and property coverages ICMA provides to its parent company and affiliates. Appropriate ERM is driven by ICMA’s role as a single-parent captive of CNOOC, whose management incorporates ICMA as an element of its overall risk management program. Furthermore, ICMA’s ratings benefit from enhancement from the ultimate parent due to implicit and explicit support, as well as other inherent benefits the captive receives from CNOOC.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and 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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