AMSTERDAM--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” of GreenStars BNP Paribas S.A. (GreenStars) (Luxembourg), a subsidiary of BNP Paribas S.A. (BNP Paribas). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect GreenStars’ balance sheet strength, which AM Best categorises 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 the company, should it need it. The shareholder has allowed GreenStars to retain all of its earnings since its incorporation in 2009.
GreenStars’ balance sheet strength is supported by 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. An offsetting rating factor remains the company’s high reliance on reinsurance; however, this is mitigated partially by GreenStars’ diversified and well-rated reinsurance panel.
GreenStars’ strong operating performance is demonstrated by its five-year average return on capital and surplus of 16.3%. Performance is driven largely by the company’s low loss experience, which helps it to obtain high inwards ceding and profit commissions. Over the longer term, performance is subject to potential volatility due to the company’s exposure to a possible accumulation of losses and to the impact of fluctuations in reinsurance market conditions. The company partly mitigates the potential aggregation of losses by purchasing extensive reinsurance.
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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