Rating agency AM Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of ‘a’ of Palms Insurance Company.
Palms, which is NextEra Energy Capital’s captive insurer, is based in the Cayman Islands. The outlook for both ratings remains stable.
The rating agency said that the ratings reflect Palms' excellent risk-adjusted capitalisation, history of consistently strong operating performance and conservative balance sheet strategies, as well as the captive's strong integration within the risk management structure of its parent, NextEra.
It added that the ratings also recognise Palms’ history of maintaining sufficient capital and financial resources to support its ongoing obligations.
“Partially offsetting these positive rating factors are Palms' limited market scope and high net loss potential stemming from a single, severe occurrence relative to surplus. Nevertheless, this is somewhat mitigated by the company’s excellent loss history, favorable geographic spread of risk and the history of support of Palms’ strong surplus position by its parent,” said AM Best.
The rating agency explained that while Palms depends on third parties for processing, servicing and administration, the senior management of its ultimate parent, NextEra Energy is closely involved in these operations.
AM Best, Palms Insurance, Insurance, NextEra Energy Capital, Cayman