LONDON--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating of A (Excellent) and a Long-Term Issuer Credit Rating of “a+” to GreenStars BNP Paribas, S.A. (GreenStars) (Luxembourg), a subsidiary of BNP Paribas S.A. (BNP Paribas). The outlook assigned to these Credit Ratings (ratings) is stable.
GreenStars is an insurance entity of BNP Paribas, the parent company of a group engaged principally in banking and financial services activities. GreenStars provides credit and political risks insurance cover that supports the group’s lending operations.
The ratings reflect GreenStars’ excellent risk-adjusted capitalisation and its track record of strong operating performance, as well as its integration in BNP Paribas’ operations.
The company’s excellent risk-adjusted capitalisation is underpinned by low underwriting leverage. Furthermore, GreenStars has demonstrated good internal capital generation, with the retention of all profits since its incorporation in 2009. A partially offsetting factor is the company’s reliance on reinsurance; however, this is mitigated as GreenStars places its reinsurance cover with an appropriately diversified panel of financially strong reinsurers.
GreenStars has consistently generated strong operating results, as demonstrated by an average five-year return on capital of approximately 17% (2012-2016). The company’s strong operating performance is driven by excellent underwriting results and is supported by positive, albeit modest, investment income. Although GreenStars’ underwriting income is exposed to potential volatility, due to the company’s exposure to relatively large losses and the impact of fluctuations in reinsurance market conditions, over the longer term, A.M. Best does not expect this to hinder the company’s ability to generate capital. GreenStars’ extensive reinsurance programme is expected to protect the company from any increase in claims’ frequency or high severity losses that it may be exposed to in an intensified insolvency environment.
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