AM Best Affirms Credit Ratings of Palms Insurance Company, Limited

Rhea-AI Summary

AM Best affirms the ratings of Palms Insurance Company, Limited, reflecting its strong balance sheet and adequate operating performance.

Positive

• Palms Insurance Company has a Financial Strength Rating of A (Excellent) and a stable outlook.
• Palms has solid risk-adjusted capitalization and consistent positive operating performance.
• Palms provides coverage primarily for the energy and utility industry and has a strong management.
• Palms underwrites insurance risks primarily from NextEra Energy and its affiliates.

Negative

• None.

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” (Excellent) of Palms Insurance Company, Limited (Palms) (George Town, Cayman Islands). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Palms’ balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Palms is a single-parent insurer wholly owned by NextEra Energy Capital Holdings, Inc. (NEECH), which in turn is wholly owned by NextEra Energy, Inc. (NextEra) [NYSE: NEE]. Palms underwrites insurance risks primarily from NextEra and its affiliates, providing specialized direct and assumed property, casualty, workers’ compensation, automobile liability and employers’ liability coverages. Palms also provides property and casualty insurance to select non-affiliated entities.

The ratings reflect Palms’ solid risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), consistent positive operating performance and conservative balance sheet strategies, as well as its strong management and significant role within the risk management structure of its parent, NEECH. The ratings also recognize Palms’ history of maintaining sufficient capital and financial resources to support its ongoing obligations.

Palms provides coverage primarily for the energy and utility industry and has high net loss potential stemming from a single, severe occurrence relative to its surplus. This is mitigated somewhat by Palms’ excellent loss history, its favorable geographic spread of risk and historically strong surplus position. Additionally, while Palms partially relies on third parties for processing, servicing and administration, Palms’ management is involved closely in these operations.

Palms has expanded and enhanced its underwriting structure with necessary talent and expertise to support the expansion into non-affiliate business. Although Palms participates in a range of coverages of its parent company for very large risks, these risks are underwritten with tight guidelines and significant loss control measures by the insured affiliates, as evidenced by favorable loss ratios over the past five years. Prospective underwriting performance still remains subject to volatility, due to Palms’ exposure to low frequency, high severity claims in its property program, which includes coverage for NextEra’s renewable energy interests and other non-affiliate coverage.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220511006046/en/

Fred Eslami

Associate Director

+1 908 439 2200, ext. 5406

fred.eslami@ambest.com

Dan Teclaw

Associate Director

+1 908 439 2200, ext. 5394

dan.teclaw@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Jeff Mango

Managing Director,

Strategy & Communications

+1 908 439 2200, ext. 5204

jeffrey.mango@ambest.com

Source: AM Best

FAQ

What are the ratings of Palms Insurance Company?

Palms Insurance Company has a Financial Strength Rating of A (Excellent) and a stable outlook.

Who owns Palms Insurance Company?

Palms Insurance Company is wholly owned by NextEra Energy Capital Holdings, Inc.

What types of insurance does Palms provide?

Palms underwrites property, casualty, workers’ compensation, automobile liability, and employers’ liability coverages.

What industry does Palms primarily provide coverage for?

Palms primarily provides coverage for the energy and utility industry.

What is the risk profile of Palms Insurance Company?

Palms has high net loss potential stemming from a single, severe occurrence relative to its surplus, but it has mitigated this risk with its excellent loss history and favorable geographic spread of risk.

What is the role of Palms Insurance Company within its parent company?

Palms has a significant role within the risk management structure of its parent, NextEra Energy Capital Holdings, Inc.