OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of ICM Assurance Ltd (ICMA) (St. Michael, Barbados). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect ICMA’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
ICMA is a single-parent captive insurer, wholly owned by CNOOC International Limited, which is in turn wholly owned by CNOOC Limited (CNOOC) [ADR-traded NYSE: CEO], ultimate parent.
The balance sheet strength is fortified by ICMA’s risk-adjusted capitalization being at the strongest level, as measured by Best Capital Adequacy Ratio (BCAR), generally favorable trend of earnings, good liquidity and low underwriting leverage. ICMA’s high gross loss potential due to the nature of the insurance provided for oil and gas exploration, which is subject to high severity losses, is tempered partially by the extensive loss control and group-wide safety programs provided by its ultimate parent, which help mitigate losses arising from its parent’s ordinary course of business. The captive’s investments are highly concentrated in a loan to its parent, reflecting strong mutual reliance and support of the parent and ultimate parent.
ICMA generally has reported adequate operating results, primarily driven by favorable underwriting results in the absence of large losses. While favorable operating performance has been good in the most recent five years, underwriting results are volatile and susceptible to occasional outsized losses. The captive’s loss experience generally has remained favorable due in part to the absence of catastrophe events and to its inherent underwriting expertise, which incorporates strong loss control programs adopted by the parent.
The neutral business profile assessment is driven by ICMA’s fundamental role as a single-parent captive of CNOOC, whose management incorporates ICMA as a core element of the enterprise’s overall risk management safety and risk mitigation programs. The captive provides liability and property coverages to the parent company and its affiliates globally.
AM 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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