AM Best to talk on captives at RISKWORLD
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AM Best has awarded a financial strength rating of A- (Excellent) and a long-term issuer credit rating of “a-” (Excellent) to Jamestown Insurance Company, the captive of Independent Energy Company Hess Oil and Gas Holdings.
It’s given the ratings a stable outlook.
According to the rating agency, Jamestown’s balance sheet is very strong, while it also benefits from “adequate operating performance, limited business profile and appropriate enterprise risk management”. According to Best’s Capital Adequacy Ratio (BCAR) measure, its risk-adjusted capitalisation is at the strongest level.
“The company’s balance sheet also benefits from a strong track record of retained earnings and its effective utilisation of third-party reinsurance to transfer risk. However, the company’s extensive reinsurance program exposes Jamestown to a high degree of credit risk, which is mitigated partially by its panel of financially strong and highly rated reinsurers,” the agency states.
Jamestown has explicit support from its New York-headquartered parent, in the form of a large loan receivable.
The captive provides Hess with access to re/insurance coverage on property, control of well, redrill, pollution and liability risks.
“The company’s operating performance is largely the result of a steady flow of dividend income and interest income, which more than offsets any negative net underwriting shortfalls. Jamestown cedes a substantial portion of its business to reinsurers and, therefore, underwriting results are modest in comparison with the company’s investment gains, which allows Jamestown to lock in healthy profits each year,” reports Best.
Jamestown, rating, Excellent, AM Best, Jamestown Insurance Company, Am Best, Insurance, reinsurance, North America America