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FOR IMMEDIATE RELEASE
LONDON - AUGUST 30, 2018 10:24 AM (EDT)
A.M. 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 A.M. Best categorises as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
GreenStars’ balance sheet strength is supported by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). A.M. Best expects GreenStars’ risk-adjusted capitalisation to remain at the strongest level, supported by good internal capital generation, modest growth and a low net underwriting leverage. Furthermore, the company’s balance sheet strength and financial flexibility benefit from its affiliation with a financially strong ultimate parent, BNP Paribas. The shareholder has allowed GreenStars to retain all of its earnings since its incorporation in 2009. An offsetting rating factor remains the company’s high reliance on reinsurance; however, this is mitigated partly by GreenStars’ diversified panel of financially strong reinsurers.
GreenStars’ strong operating performance is demonstrated by its five-year average return on capital and surplus of 17.4%. Performance is driven largely by the captive’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. Its 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.
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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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