21 May 2013Analysis

BP’s Jupiter performed strongly in 2012

BP’s Guernsey-based captive, Jupiter has had its financial strength rating affirmed as A (Excellent) and its issuer credit rating at “a” by AM Best as a result of almost $2 billion in technical profit achieved in 2012.

The rating agency said that the captive’s strong underwriting performance—which resulted in $1,924 million in technical profit being achieved in 2012—and levels of capitalisation that reached $7.6 billion in 2012 had been behind the rating affirmation, but warned that the volatility of Jupiter’s book of business will present challenges.

AM Best said that the captive displays high levels of risk retention and a concentrated investment portfolio, focused almost entirely on instruments linked to BP. These have the potential to create issues for the captive, but benign loss experience in 2012 has helped to strengthen an already impressive balance sheet that AM Best believes can absorb a small number of major claims.