4 February 2019Analysis

AM Best upgrades Sony's Bermuda captive

Ratings agency AM Best ha upgraded the financial strength rating of Sony's Bermuda-based pure captive PMG Assurance from A- (Excellent) to A (Excellent).

This change reflects PMG’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

The ratings also reflect PMG’s strategic position as the captive insurance company for the Sony Group, whose ultimate parent is Sony Corporation.

As pure captive of Sony, PMG's role is to meet certain global insurance requirements and provide risk management services to Sony Group members.

PMG predominantly covers commercial property and marine for Sony, and employee benefits coverage for Sony employees.

Sony's credit risk profile has improved, which has experienced a positive trend over the past several years. Sony has made improvements in terms of its earnings quality, increased cash flow and a significant reduction to debt.

PMG's strengths are derived from its underwriting focus, conservative operational strategy and emphasis on risk management controls, AM Best outlined.

The captive's operating performance continues to be strong, with favourable net income in four of the past five years predominantly from net underwriting income.

PMG is susceptible to volatility in earnings due to the low frequency and high severity losses it insures; however, it mitigates its exposures through the use of a comprehensive reinsurance programme.