AM Best Affirms Ratings Of Isosceles Insurance
A.M. Best has affirmed the financial strength rating of B++ [Good] and the issuer credit rating of “bbb+” ofIsosceles Insurance Ltd. [Isosceles] [Bermuda]. The outlook for both ratings is stable.
A statement from the ratings agency said, “The ratings recognize Isosceles’ adequate capitalization, as well as strict risk and exposure controls in the form of security and indemnification clauses of several agreements between various key parties involved. These agreements significantly isolate Isosceles from liability and insulate each cell from each other and from the general account.
“The ratings further acknowledge the financial and operating strengths of Isosceles’ parent, Jardine Lloyd Thompson Group plc [JLT], a global provider of insurance and employee benefits related advice, brokerage and associated services.
“Furthermore, the ratings consider the financial wherewithal of each individual part as well as the consolidated accounts, Best’s Capital Adequacy Ratio [BCAR] and the underlying risks that each cell insures. Additionally, the ratings recognize Isosceles’ ultimate third party reinsurance participation, which is composed of highly rated global reinsurers.
“Formed in 1997, Isosceles is a Bermuda licensed insurance company holding a Class 3 insurance license that permits it to issue policies of insurance to related and unrelated parties. Isosceles also operates under a private act of the Bermuda Legislature entitled, “The Isosceles Insurance, Ltd. Act, 1997,” which permits it to establish and operate separate accounts or cells. In addition to certain contractual protections, Isosceles employs a variety of structures, common in the insurance and reinsurance industry, to mitigate its contractual liabilities and to protect its capital, including protection with highly rated reinsurance and acceptable collateral deposits.
“These positive rating factors are partially offset by Isosceles’ lack of a full test in a court of competent jurisdiction on the legality of the walled-off structure between any two or more cells within a general account and the exclusive reliance on JLT for production of all of its business.
“A.M. Best recognizes the complexities involved in this structure and will regularly monitor the financial performance of the cell counterparties and the general account to ensure that the capital is adequate to support Isosceles’ current ratings. Also offsetting these positive rating factors is the execution risk present in all new structures that bear risk. A.M. Best will monitor this closely during the next several months.
“Factors that could influence the ratings of Isosceles include changes in the financial ability of each individual client, its BCAR score and the overall risk profile of each individual cell, including commercial reinsurers’ ratings and the financial wherewithal of JLT and Isosceles.”
