Fitch affirms Monticello ratings

Fitch has confirmed that it has affirmed Monticello Insurance Limited's (MIL) Insurer Financial Strength (IFS) rating at 'BBB' with a stable outlook.

The rating agency said that it considers MIL a core captive of Vale and therefore, the insurer's rating is linked to the parent's rating, as they generally receive an IFS rating equal to the IDR of the captive's parent.

Fitch explained that this is because the insurer's mission and goals are tied to Vale's risk management and risk financing strategy. All of MIL's business is derived from the parent, and the insurer is not viewed as a profit centre. Its objective is to improve Vale's efficiency and to support efforts to optimize the operational and financial activities.

“Vale has made a reasonable financial support to MIL and appears to support its continued solvency and viability through revolving loan agreements and issues letters of credit (LOCs) to fronting insurers and provides timely capital injections when needed,” Fitch said. “The last major injections totalled $241 million in 2012 and 2013. Since then, there has been no need for such support.”