AM Best affirms A- FSR for Sony captive

AM Best has affirmed the financial strength (FSR) rating of A- (Excellent) of captive insurance firm PMG Assurance.

The outlook for the rating is negative.

The rating reflects PMG’s excellent capitalisation, historically strong operating performance and strategic position as the captive insurance company for the Sony Group, whose ultimate parent is Sony Corporation, according to AM Best.

It also reflects PMG’s role as a single parent captive of Sony, the support provided by its exponentially larger parent and the resources available to it if necessary, said the firm.

According to AM Best, PMG’s strengths are derived from its underwriting focus, long-standing customer relationships and conservative operating strategy.

PMG writes mostly proportional property and marine reinsurance business and ceased writing life business effective January 16, 2011. However, PMG recently added a small amount of employee benefits coverage. These factors are offset by PMG’s large exposure to earthquake-related losses in Japan and potential constraints caused by Sony’s modest credit risk profile given PMG’s dependence on Sony. The captive continues to be an integral component of Sony’s risk management platform.

Rating factors that could lead to PMG’s outlook being revised to stable include long-term consistently strong operating performance, maintaining strong risk-adjusted capital levels and executing its business plan in conjunction with overall improvement in Sony’s rating.

AM Best could downgrade the company’s ratings or revise the outlooks of its Best’s Capital Adequacy Ratio (BCAR) score declines significantly, operating performance and risk profile deteriorate or its parent’s credit ratings profile deteriorates.