AM Best Affirms Credit Ratings of ICM Assurance Ltd
AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of 'a-' for ICM Assurance Ltd (ICMA), with a stable outlook. This rating reflects ICMA's strong balance sheet, adequate operating performance, and neutral business profile. Despite its exposure to high severity loss events due to its insurance of CNOOC’s oil and gas exploration, ICMA benefits from strong liquidity and reinsurance protections. The risk-adjusted capitalization is considered strongest, and the insurance provider has demonstrated adequate operating performance over recent years.
- Affirmation of A- rating indicates strong financial health.
- Strong risk-adjusted capitalization categorized as 'strongest'.
- Adequate operating performance with profitable results in stable periods.
- Robust liquidity measures mitigate counterparty risks.
- Exposure to high gross loss potential from oil and gas sector.
- Volatility in results due to occasional outsized losses.
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) is 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 (ERM).
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], the ultimate parent.
ICMA’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is categorized as strongest, and AM Best expects it to remain at a similar level prospectively. The balance sheet strength assessment also considers ICMA’s low underwriting leverage and strong liquidity measures. Due to the nature of the insurance ICMA provides for CNOOC’s oil and gas exploration, it carries a high gross loss potential and remains exposed to high severity events. However, this risk is offset partially by extensive loss control and safety programs provided by CNOOC, which are intended to mitigate losses arising from the enterprise’s ordinary course of business. In addition, reinsurance protection is placed to limit ICMA’s net exposure to shock loss events. Also noteworthy is the significant percentage of assets that ICMA has loaned to its parent. These investments are liquid and repayable on demand, so there is limited counterparty risk due to the affiliation of the two companies.
ICMA has experienced adequate operating performance, with profitable results in periods absent of large underwriting losses. While results on average have been sound over the most recent five years, there are occasional outsized losses that have caused volatility. Due to the absence of major catastrophe events, coupled with inherent business knowledge and loss control, the captive’s loss experience has remained favorable.
The business profile assessment of neutral is based upon the global liability and property coverages ICMA provides to its parent company and affiliates; and its appropriate ERM is driven by ICMA’s role as a single-parent captive of CNOOC, whose management incorporates ICMA as an element of its overall risk management and risk mitigation program.
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.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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