BNP Paribas captive rating affirmed

AM Best has affirmed the financial strength rating of A of GreenStars BNP Paribas, a Luxembourg-based captive subsidiary of BNP Paribas. The outlook is stable.

The ratings agency said the rating reflected GreenStars’ balance sheet strength, which AM Best assessed as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

The ratings also considered, in the form of rating lift, AM Best’s expectation that BNP Paribas, a financial services company, will provide financial support to GreenStars, if needed. The shareholder has historically allowed GreenStars to retain all of its earnings since its incorporation in 2009.

"GreenStars’ strong operating performance is demonstrated by its return on capital and surplus of 16.6% for the five-year period ending in 2023, as calculated by AM Best," the agency said. "Historical performance has been driven largely by the company’s low loss experience, which has helped it obtain high inward ceding and profit commissions. 

"AM Best expects the company’s prospective performance to remain strong, albeit subject to potential volatility stemming from changing global macroeconomic conditions. GreenStars’ extensive reinsurance programme helps to mitigate the effect of potential claims volatility on a net basis."

AM Best said GreenStars provides support for BNP Paribas’ lending operations, as a credit-risk management tool. The company’s business profile benefits from having direct access to the group’s good quality credit risks. While GreenStars is concentrated in credit insurance, its business profile assessment reflects its diversification by geography, type of credit risk and obligor.

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