HONG KONG--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of INPEX Insurance, Ltd. (IIL) (Bermuda). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect IIL’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
IIL’s very strong balance sheet strength assessment mainly reflects its low underwriting leverage and conservative investment portfolio. Despite some volatility in the loss and combined ratios, underwriting results over the most recent five-year period have been consistently positive. The ratings also reflect IIL’s role within the insurance purchase strategy and corporate risk management of its parent, INPEX CORPORATION (INPEX).
IIL is a single parent or pure captive insurer wholly owned by INPEX, which is the largest oil and gas exploration and production company in Japan. In its role as a single parent captive, it provides coverage that mainly consists of property damage, third-party liability and operator’s extra expenses for its parent, its affiliates and joint-venture companies.
Partially offsetting these positive rating factors are IIL’s limited market scope and high gross loss potential relative to its capital base. Nevertheless, these negative rating factors are somewhat mitigated by the company’s favorable geographic spread of risk, prudent underwriting, and a robust reinsurance program that has conservative retention and limits.
Positive rating actions could occur if IIL continues to maintain its very strong balance sheet strength, along with more stable underwriting and operating results. Negative rating actions could occur if there is a substantial increase in losses caused by a material shift in risk appetite or significant erosion of capital. In addition, significant deterioration in INPEX’s credit profile could put downward pressure on IIL’s ratings.
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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