Pfizer captive has helped company navigate hard markets, says ratings agency
Pharmaceutical giant Pfizer has used its Vermont-based captive re/insurer to help it to navigate hard markets in catastrophe and cyber reinsurance, according to ratings agency AM Best.
The agency said Blue Whale Re, which had its A financial strength rating affirmed with a stable outlook, provided economic efficiency for Pfizer.
"Blue Whale is a wholly owned captive insurance subsidiary of Pfizer, created to insure or reinsure specific risks of its parent organization," AM Best said.
"In recent years of hard market conditions, Blue Whale has opted to participate in small slices of its catastrophe tower as an economic efficiency for the Pfizer enterprise. It also offers capacity for cyber liability coverage when required by hard market pricing."
AM Best added that the A rating reflected Blue Whale’s balance sheet strength, which it assessed as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
It added: "As Blue Whale insures or reinsures Pfizer’s global property exposures, it plays a strategic and critical role in Pfizer’s overall ERM in protecting the Pfizer enterprise’s assets.
"Blue Whale provides coverages with ample limits with substantial retentions, augmenting significant reinsurance capacity supporting its obligations. Nonetheless, the reinsurance programme is appropriate and diverse, providing ample coverage for all its lines of business. AM Best recognizes the quality of the reinsurers and the substantial financial resources and assistance available to the captive as part of Pfizer.
"The captive’s operating performance remains favourable when compared with its peers with low average loss and minimal expense ratios. The volatility of key metrics is within its risk tolerance and can be moderate with its high retentions for low frequency, high severity coverage as experienced in 2023.
"Negative rating action could occur if AM Best's perception of Pfizer’s ability and/or willingness to support the captive changes."
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