A.M. Best Affirms Bison’s Ratings
A.M. Best Co. today [Dec.6] affirmed the financial strength rating of A- [Excellent] and issuer credit rating of “a-” of Bermuda’s Bison Insurance Company Limited.
The outlook for both ratings is stable.
In its report, the international ratings agency said: “Bison’s ratings reflect the company’s historically adequate capitalisation, generally favorable operating performance, conservative reserve levels and effective enterprise risk management controls. The ratings also recognise Bison’s history of maintaining sufficient capital and financial resources to support its ongoing obligations.
“Partially offsetting these positive rating factors are the company’s volatile underwriting results due to its low frequency, high severity risk profile, coupled with its high net retained limits relative to its available capital. Additionally, the continually changing risk profile of Bison’s primary insureds directly impacts Bison’s risk profile. This is mitigated by the company’s conservative reserving philosophy and the ongoing, demonstrated support from its parent, Duke Energy Corporation.
“The risk management team of Duke Energy takes a holistic approach to managing the risks of the parent company and utilizes the captive as an integral part in this process. Bison continues to acquire additional lines of business from Duke Energy, thereby providing additional diversification of risks. Bison’s long-term growth opportunities primarily depend on the business success of Duke Energy.”"
The current ratings take into account the potential for future earnings volatility. In A.M. Best’s view, a positive rating action is dependent upon improved stabilisation in Bison’s operating performance and stable improvement in risk-adjusted capitalisation that materially exceeds A.M. Best’s expectations. A positive rating action also could occur due to the improved credit profile of Duke Energy.
The potential for a negative rating action could result if volatility in operating performance exceeds A.M. Best’s expectations and results in a significant prolonged decline in risk-adjusted capitalisation. In addition, deterioration in the credit profile of the parent could impact Bison’s ratings.
