HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit rating (ICR) of “a-” of INPEX Insurance, Ltd. (IIL) (Bermuda). The outlook for both ratings is stable.
The rating reflects IIL’s favorable operating results and strong risk-adjusted capitalization. In addition, IIL benefits from implicit and explicit support provided by its parent company, INPEX CORPORATION (INPEX). As a single parent captive domiciled in Bermuda, IIL provides marine and energy coverage to the parent and its affiliated global companies.
IIL reported an improvement in profitability since it reported a loss in 2011, mainly due to the absence of large losses during the subsequent period. Although the majority of IIL’s capital is loaned back to INPEX, IIL is considered to have relatively low risk due to this affiliation, and also benefits from the parent’s strong balance sheet and earnings profile.
Partially offsetting these positive rating factors are IIL’s significant reinsurance credit risk stemming from the large limits offered on its policies and the possible change in the captive’s net retentions.
Positive rating actions could occur if IIL continues to produce robust earnings while maintaining its strong level of risk-adjusted capitalization with an increase in absolute capital amount. Negative rating actions could occur if there is a material shift in the risk profile that could potentially undermine the stability and profitability of IIL. In addition, deterioration in the credit profile of INPEX could also impact IIL’s ratings.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
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