AM Best affirms INPEX ratings

AM Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” of Bermuda-based INPEX Insurance (IIL). The outlook of these credit ratings is stable.

The ratings reflect IIL’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

AM Best said that IIL’s very strong balance sheet assessment mainly reflects its low underwriting leverage and conservative investment portfolio. Given the volume of risks that the company currently writes and retains, the capital required to support its current book of business is relatively modest.

The rating agency said that IIL’s underwriting results over the most-recent five-year period have been consistently positive, contributing to an average combined ratio of under 40 percent. Despite very strong underwriting margins, loss and combined ratios have been volatile, owing primarily to a relatively small in-force portfolio. AM Best expects IIL’s operating performance to remain profitable, although the company’s underwriting results also likely will remain volatile until the company can achieve much greater scale.

IIL is a single-parent captive of INPEX CORPORATION (INPEX), which is a Japanese oil and gas exploration and production company. In its role as a single-parent captive, it provides coverage that mainly consists of property damage, third-party liability and operator’s extra expenses for its parent, its affiliates and joint-venture companies.

The stable outlook reflects AM Best’s expectation that IIL will continue to deliver consistently positive operating results, supported by a return to growth with strong underwriting margins and stable investment yields.