OLDWICK, N.J., December 01, 2021--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to "a" (Excellent) from "a-" (Excellent) of ICM Assurance Ltd (ICMA) (St. Michael, Barbados). ICMA is a single-parent captive insurer, wholly owned by CNOOC International Limited, which is in turn wholly owned by CNOOC Limited (CNOOC), the ultimate parent. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect ICMA’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The rating upgrades reflect AM Best’s perception of ICMA’s increasing strategic importance to its ultimate parent, CNOOC, as indicated by lower parental dividends and growing capital in support of prospective underwriting opportunities to cover CNOOC’s exposures. ICMA receives implicit and explicit support as well as other inherent benefits as a captive insurance company for CNOOC. ICMA is considered a core element of CNOOC’s overall risk management and risk mitigation program and serves a critical role in delivering direct coverage and access to reinsurance for specific property, control of well, general liability and other risks of its parent, subsidiaries and affiliates.
ICMA’s balance sheet strength is underpinned by its risk-adjusted capitalization being at the strongest level, as measured by Best Capital Adequacy Ratio (BCAR), as well as its strong liquidity, low underwriting leverage and consistent reserving practices. ICMA is subject to high severity gross losses due to the nature of the coverages it provides for CNOOC’s oil and gas exploration. However, this exposure is tempered by loss control and group-wide safety programs executed across the enterprise. The captive’s reinsurance protection is placed with a panel of financially strong reinsurers, limiting its net exposure to shock losses. ICMA’s surplus consists of capital and underwriting profits retained in the captive and loaned back to its parent. The loan is repayable on demand and has limited counterparty risk due to the affiliation and the aligned interests of the two companies.
ICMA has reported adequate operating results, with net operating profits recorded over the past five years, including years with volatility. Most recently, the captive’s loss experience has remained favorable due to the lack of material catastrophe events, management’s inherent knowledge of the business written and the strong loss control programs adopted at the parent level. Finally, ICMA’s business profile assessment considers its role as a single-parent captive providing global liability and property coverages to its ultimate parent and affiliates.
AM 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 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 Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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