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FOR IMMEDIATE RELEASE
LONDON - NOVEMBER 12, 2018 08:01 AM (EST)
A.M. Best’s European captive ratings have been stable through the past year, with most of the ratings affirmed and their stable outlooks maintained, according to a new report by A.M. Best.
The Best’s Special Report: “European Captives – Building Block Rating Considerations” discusses the key rating considerations as they apply to the European captives rated by A.M. Best, providing details of the captives’ balance sheet strength, operating performance, business profile and enterprise risk management (ERM). All of the European captives rated by A.M. Best have balance sheet strength assessments in the two highest categories: strongest and very strong, underpinned by risk-adjusted capitalisation, which tends to be at the strongest level as measured by Best’s Capital Adequacy Ratio (BCAR). The robust risk-adjusted capitalisation of the rated captives is also reflected in their excellent regulatory solvency ratios, with available capital usually exceeding capital requirements significantly.
Mathilde Jakobsen, director, analytics, said: “The European parents of captives rated by A.M. Best are supportive of their high levels of risk-adjusted capitalisation, recognising that the captives should be able to absorb worst-case scenario losses without requiring additional funding.
The report states the European captives rated by A.M. Best fulfill the majority of the parent organisation’s insurance needs, with relatively little primary cover placed in the external market. This ensures that the parent organisation has access to claims data and loss information across its different business segments and perils.
George Athanasopoulos, financial analyst said: “Captives are typically not at the forefront of product evolution. Nonetheless, as insurance products evolve, captives do consider adding new types of cover to their offerings to serve better their client organisations. For example, A.M. Best notes some captives have started to offer cyber cover to their parent groups over the past couple of years, but this has only happened after these products were well established in the external market.”
To access a complimentary copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=279973 .
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.