AM Best affirms BNY Mellon captives' ‘excellent’ rating

AM Best has affirmed the financial strength of A (Excellent) for two captives belonging to The Bank of New York Mellon (BNY Mellon), BNY Trade and The Hamilton Insurance Corporation, based in Bermuda and New York, respectively.

The rating agency said that the outlook for the ratings are stable, and reflect each company’s strong risk-adjusted capitalisation, consistently excellent operating performance, solid liquidity and conservative operating strategy.

However, partially offsetting these positive factors are the companies’ limited market scope, business profile and product mix, as well as its dependence on third parties for processing, servicing and administration.

AM Best also suggested the companies’ maintain relatively large (gross) underwriting exposure, as they offer high-gross insurance limits and insure bankers’ professional liabilities and excess all risk property with substantial insured values.

The ratings agency also recognises BNY Trade’s and Hamilton’s robust enterprise risk management (ERM) frameworks, as they follow the ERM practices of their ultimate parent, BNY Mellon.

Negative rating actions could occur if there were a material shift from its risk profiles that potentially could undermine the stability of the ratings, said AM Best.

Any material shifts in ownership, strategy or significant changes in the company’s financial condition caused by a large catastrophe could also leads to negative action.

Finally, negative rating actions could also occur if there were financial issues resulting in rating pressure on the parent company, or deterioration on its credit profile could also impact the operating companies’ ratings.

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