AM Best affirms ratings for Solen Versicherungen and Noble Assurance

AM Best has affirmed the financial strength ratings of A (Excellent) and the long-term issuer credit ratings of “a+” (Excellent) of Solen Versicherungen (SVAG) and Noble Assurance Company. The outlook of these ratings is stable.

The ratings reflect SVAG’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. In addition, the ratings factor in rating enhancement from SVAG’s ultimate parent, Shell, reflecting the company’s importance to the group as a well-entrenched risk management tool.

SVAG’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects the captive’s BCAR scores to remain above the minimum required for the strongest assessment level prospectively, reflecting the insurer’s strategy to maintain sufficient capital buffers to absorb a series of large losses. The balance sheet strength assessment also factors in a concentration of assets in intragroup investments, as well as the large gross and net line sizes offered by the captive relative to its capital base.

AM Best said that SVAG has a track record of strong operating performance, underpinned by robust underwriting results, as demonstrated by a five-year (2020-2024) weighted average combined ratio of less than 25%. Prospective underwriting performance is subject to potential volatility due to the captive’s exposure to high-severity low-frequency losses, given its large net line sizes relative to its premium base. In addition, the captive is exposed to elevated market risk through its management of the Shell group’s foreign currency warehousing activities, which drives a level of variability in overall earnings. Nonetheless, SVAG’s key performance metrics are expected to remain supportive of a strong assessment over the medium term.

SVAG’s business profile assessment reflects its key role in supporting Shell’s overall risk management framework, as the group’s principal captive. SVAG’s non-life business mostly consists of offshore and onshore property and liability risks, as well as the associated business interruption covers. SVAG also writes a small book of life business, which is derived from the reinsurance of the group’s pension liabilities.

The ratings of Noble reflect its status as a member of the SVAG rating unit and a subsidiary of Shell. As a captive domiciled in Texas, Noble underwrites Shell’s US business and cedes 100% of its risks to SVAG, its sister company, through a quota share reinsurance agreement.

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