AM Best affirms Transmonde ratings

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

According to AM Best the ratings reflect Transmonde’s balance sheet strength, which it categorises as strongest, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

Partially offsetting these rating factors are Transmonde’s high retentions and concentration in liability lines with significant loss severity potential, and its limited market profile as a single parent captive. Transmonde provides professional, general and pollution liability coverages to members of the International Association of Superintendents, which are subsidiaries of SGS SA (SGS), a publicly traded Swiss company.

The rating agency said that Transmonde has maintained very conservative underwriting leverage ratios, as surplus has remained strong to support its business volumes. Historically, surplus growth is the result of retained earnings from highly profitable operating results driven by excellent underwriting performance. The company has posted low loss and loss adjustment expense ratios, which reflect SGS’s effective risk management. Its relatively high per-occurrence retentions are mitigated by significant deductibles and conservative reserving practices.

While the rating outlooks are stable, factors that could lead to positive rating actions include a material increase in Transmonde's risk-adjusted capitalisation and consistently favourable operating results at SGS S.A. Factors that may lead to negative rating actions include sustained adverse global economic conditions affecting SGS S.A. and Transmonde, material loss of risk-adjusted capitalisation, deterioration of operating performance or an increase in net retention.