Best’s News & Research Service - May 27, 2016 11:08 AM (EDT)
A.M. Best Revises Issuer Credit Rating Outlook to Stable for Jupiter Insurance Limited
- May 27, 2016 11:08 AM (EDT)
London //BestWire// - A.M. Best has revised the issuer credit rating (ICR) outlook to stable from positive and affirmed the financial strength rating (FSR) of A (Excellent) and the ICR of “a” of Jupiter Insurance Limited (Jupiter) (Guernsey), a captive of BP p.l.c. (BP). The outlook for the FSR remains stable.
The ICR outlook has been revised to stable because an upgrade to the rating is considered unlikely in the short term, due in particular to difficult market conditions in the energy sector.
The affirmation of the ratings reflects Jupiter’s excellent risk-adjusted capitalisation and strong earnings track record. An offsetting rating factor is the captive’s high net underwriting limits, as well as its concentrated investment portfolio, which predominantly consists of financial instruments linked to its ultimate parent, BP.
Jupiter’s underwritten risks consist largely of offshore and onshore property and business interruption cover. The captive enables BP to optimise its insurance protection in terms of scope and cost. In addition, Jupiter provides reinsurance to its sister captive, Saturn Insurance Inc.
The captive has reported excellent and stable technical results over the past five years, driven primarily by the absence of large losses.
Risk-adjusted capitalisation is expected to remain excellent. A capital base of about USD 7,039 million for 2015 adequately supports the captive’s high net retention limit of USD 1,500 million.
Jupiter’s investments are highly concentrated with 99% invested in two discount notes issued by BP International Limited with duration of one and three months, as at year-end 2015. Consequently, A.M. Best considers Jupiter’s financial strength to be closely linked to that of BP.
A.M. 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.
This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page.
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