27 March 2013Cayman analysis

AM Best assigns excellent rating to Palms Insurance

Cayman-based Palms Insurance Company has been assigned a financial strength rating of A (Excellent) by rating agency, AM Best.

The captive has also been assigned an issuer credit rating of ‘a’, with its outlook regarded as stable. Palms Insurance is a single parent captive of NextEra Captial Holdings, a wholly-owned subsidiary of NextEra Energy, a US-based energy company specialising in renewable energy.

Palms insures select risks from NextEra Energy and its affiliates, including casualty, workers comp, automobile, employee liability and property risks.

AM Best said that the positive rating “reflect Palms' excellent risk-adjusted capitalization, history of consistently strong operating performance, sound risk management capabilities and conservative balance sheet strategies. The ratings also recognise its history of maintaining sufficient capital and financial resources to support its ongoing obligations.”

AM Best added that its geographic diversification, history of strong support from its parent and returns on surplus that have averaged 18.7 percent over the past five years, have all helped in its strong rating. The rating agency did however warn that its “limited market scope” and exposure to potentially sizable loss events had partially offset upside factors.