AM Best has affirmed the financial strength rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Bermuda-based Rembrandt Insurance Company. The outlook of these ratings remains stable.
Rembrandt is a captive re/insurer of Vitol Holding, a holding company of a group engaged principally in trading petroleum-related products and commodities.
The rating agency said that the ratings reflect Rembrandt’s balance sheet strength, which AM Best categorised as ‘very strong’, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
Rembrandt’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects Rembrandt’s risk-adjusted capitalisation to remain at the strongest level, supported by low net underwriting leverage and an outward reinsurance programme that is placed with a panel of financially strong reinsurers.
Partly offsetting factors in the balance sheet strength assessment include the captive’s reliance on reinsurance and its concentrated asset base, with a loan provided by Rembrandt to the Vitol group that represented 53 percent of the captive’s total assets at year-end 2017 (2016: 59 percent). The risks associated with this loan are mitigated somewhat by terms that allow it to be redeemed at short notice.
AM Best said that Rembrandt’s strong operating performance is demonstrated by its five-year average return on capital of 13.2 percent (2013-2017) and is primarily driven by its excellent underwriting results, with a five-year average combined ratio of 15.7 percent (2013-2017). Operating results are further supported by stable, albeit modest, investment returns. Rembrandt’s business profile assessment of limited reflects the company’s relatively small insurance portfolio, which is concentrated by product.
Approximately 90 percent of the captive’s premiums derive from marine cargo and liability risks. Over the past five years, Rembrandt’s premium revenue has declined at an average annual rate of approximately 11 percent, adversely affected by the soft rate environment and low oil prices.
Rembrandt, AM Best, ratings, strength, captive