Best’s News & Research Service - July 30, 2014 10:27 AM (EDT)
A.M. Best Affirms Ratings of Transportation Property and Casualty Company Inc.
Oldwick //BestWire// - A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of "a" of Transportation Property and Casualty Company Inc. (TPCC) (British Columbia, Canada). The outlook for both ratings is stable.
The ratings reflect TPCC's excellent risk-adjusted capitalization and operating performance, its strong enterprise risk management program and highly experienced management team. Also inuring to the benefit of the ratings is the captive's favorable profile as part of the South Coast British Columbia Transportation Authority (TransLink). Partially offsetting these positive rating factors are TPCC's relatively small scale of operations and high exposures.
TPCC is a pure captive insurance company that provides automobile physical damage, general liability and property insurance coverage solely to TransLink. TPCC has demonstrated its usefulness and effectiveness to TransLink over many years by providing flexibility for insurance program structuring and substantial insurance cost efficiencies. TPCC is an integral part of TransLink's existing projects and future planning.
Factors that could lead to a downgrade of TPCC's ratings or a revised outlook to negative are a material loss of capital from either claims or investments, a reduced level of capital that does not support the ratings, as measured by Best's Capital Adequacy Ratio (BCAR), or an increase in net retention. TPCC's ratings are somewhat linked to the rating of TransLink; therefore, unfavorable operating performance or material loss of capital at TransLink could result in changes to the captive's ratings. Alternatively, factors that could lead to a rating upgrade include TPCC sustaining favorable operating profitability while maintaining strong risk-adjusted capital levels.
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.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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