OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Transmonde Services Insurance Company Limited (Transmonde) (Hamilton, Bermuda). The outlook of these Credit Ratings (ratings) remains stable.
The ratings and outlooks reflect Transmonde’s excellent risk-adjusted capitalization, minimal underwriting leverage and consistently profitable operating results driven by excellent underwriting performance.
Partially offsetting these positive rating factors are Transmonde’s relatively high retentions and concentration in liability lines with significant loss severity potential, and its limited market profile as a single parent captive. Transmonde provides professional, general and pollution liability coverages to members of the International Association of Superintendents, which are subsidiaries of SGS SA (SGS), a publicly traded Swiss company (SWX: SGSN).
Transmonde has maintained very conservative underwriting leverage ratios, as surplus has remained strong to support its business volumes. Historically, surplus growth is the result of retained earnings from highly profitable operating results driven by excellent underwriting performance. The company has posted low loss and loss adjustment expense ratios, which reflect SGS’s effective risk management. Its relatively high per-occurrence retentions are mitigated by significant deductibles and conservative reserving practices.
While the ratings are stable, factors that could lead to positive rating actions include continued maintenance of Transmonde’s excellent risk-adjusted capitalization and consistent favorable operating results at SGS. Factors that may lead to negative rating actions include sustained adverse global economic conditions affecting SGS and Transmonde, material loss of risk-adjusted capitalization, deterioration in operating performance or an increase in net retention.
A.M. 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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