AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of "a" of Jupiter Insurance Limited (Jupiter) (Guernsey), a captive of BP p.l.c. (BP), an integrated global oil and gas company. The outlook of the Credit Ratings (ratings) is stable.
The ratings reflect Jupiter’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Jupiter’s balance sheet strength is supported by its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). Offsetting rating factors include the captive’s high underwriting limits provided to a number of different locations and facilities, as well as its concentrated investment portfolio, which predominantly consists of financial instruments linked to BP, its ultimate parent.
AM Best expects Jupiter’s risk-adjusted capitalisation to remain at the strongest level, supported by strong internal capital generation. A capital base of approximately USD 6.5 billion at year-end 2019 supports the captive’s high maximum line size of USD 1.5 billion. The captive does not purchase any outward reinsurance cover. Jupiter’s investments are highly concentrated, with 99% accounted for by discount notes issued by BP International Limited, with durations of one month to a year. Consequently, AM Best considers Jupiter’s financial strength to be linked closely to that of BP.
The captive has reported strong operating results over the past five years, mainly driven by strong underwriting profits in the absence of large losses. However, soft market conditions, lower insured values due to BP’s divestments and lower oil prices have put significant downward pressure on Jupiter’s premium income.
Jupiter’s business profile assessment reflects its key role in BP’s overall risk management framework, as its principal captive. Jupiter’s underwritten risks consist largely of offshore and onshore property and business interruption cover. The captive allows BP to optimise its insurance protection in terms of scope and cost. In addition, Jupiter provides reinsurance to its sister captive, Saturn Insurance Inc.
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 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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