AM Best awards A- rating to OneNexus Oklahoma Captive

AM Best has assigned a financial strength rating of A- (Excellent) and a long-term issuer credit rating of “a-” (Excellent) to OneNexus Oklahoma Captive. The outlook assigned to these ratings is stable.

The ratings reflect OneNexus’ balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

OneNexus is a property/casualty protected cell captive insurer domiciled in Oklahoma that was incorporated in 2021. OneNexus started writing business in 2023 as a special purpose insurer providing contractual liability insurance policies for the decommissioning of oil and gas wells and facilities for its parent company, OneNexus to manage risks associated with asset retirement obligations that arise when oil and gas wells are drilled and obligations reside with the owner/operator of the oil and gas wells. OneNexus guarantees a defined benefit amount to the owner/operator of the wells at the time the well is chosen/required to be decommissioned.

OneNexus’ balance sheet strength assessment is supported by its strongest risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), and reflects the captive’s permanent regulatory capital in the form of a letter of credit pledged by a highly rated reinsurance company. The balance sheet strength assessment also reflects the company’s conservative investment portfolio composed of fixed income securities, short-term investments, and cash and cash equivalents. The captive does not currently utilise reinsurance partially offsetting the positive factors above.

As a start-up company, OneNexus has limited historical operating results; however, early results are considered adequate as the company posted positive earnings in 2024. Overall, the company’s performance to date has benefited from prudent underwriting, its niche business profile and appropriate ERM framework. Growth in the business will depend largely on regulatory requirements requiring financial assurance by oil and gas operators, as well as market acceptance.

The stable outlooks reflect AM Best’s expectation that OneNexus will execute its business plan as provided while maintaining an overall balance sheet assessment in the very strong range, supported by risk-adjusted capitalisation at the strongest level, as measured by BCAR.

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