Energy captive has rating affirmed

A Bermuda-based captive energy insurer has had its 'A' financial strength rating affirmed, in part because it has secured stable reinsurance capacity as a result of its parent company joining energy mutual insurer Everen.  

Ratings agency AM Best said INPEX Insurance (IIL) has had its capital increased by its parent, INPEX, and has secured stable reinsurance capacity. It is expected to reduce reliance on other commercial reinsurers as INPEX recently became a member of Bermuda-based Everen. The ratings agency said the outlook for INPEX Insurance is stable.  

IIL has consistently generated robust underwriting results over the last five years with low combined ratio bolstered by a favourable claims experience and low-cost structure, the agency said. 

"After a notable premium growth in 2022, owing to a large-scale LNG project led by INPEX, IIL’s net premium income further expanded by 58% in 2023, primarily due to reduced reinsurance premiums," the agency said. 

"Despite additional expense incurred from the required accrual of theoretical withdrawal premium for the new Everen’s membership, IIL continued to report favourable underwriting performance with a net underwriting profit of $6.8 million in 2023. 

"The company’s bottom line was further bolstered by a significant increase in investment profits in 2023, due to the recent higher interest rate environment in the US. AM Best expects the positive trends in IIL’s fundamental underwriting performance to continue over the medium term with stable profitability."

AM Best said the single parent captive's ratings reflected its balance sheet strength, which AM Best assessed as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

IIL’s risk-adjusted capitalisation was assessed at the strongest level, and is expected to remain there over the intermediate term. The company’s balance sheet strength is underpinned by its conservative net underwriting leverage and a highly conservative investment portfolio. 

INPEX is the largest oil and gas exploration and production company in Japan. IIL mainly participates in energy operational risks of which the coverage mainly encompasses property damage, third-party liability and operator’s extra expenses, AM Best said. 

"The company is cautiously venturing into underwriting oil and gas construction risk and operational wind risks of selected projects. Although there is some product/geographic concentration, AM Best expects that such concentration can be partially mitigated as INPEX continues to expand its global footprint and IIL underwrites new risks."

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