AM Best Affirms Credit Ratings Of Rembrandt

September 22, 2019

AM Best has affirmed the Financial Strength Rating of A [Excellent] and the Long-Term Issuer Credit Rating of “a” of Rembrandt Insurance Company, Ltd. [Rembrandt] [Bermuda], a captive [re]insurer of Vitol Holding B.V. [Vitol], a group engaged in trading of petroleum-related products. The outlook of these Credit Ratings [ratings] remains stable.

The ratings agency said, “The ratings reflect Rembrandt’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management [ERM].

“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, an outward reinsurance programme that is placed with a panel of financially strong reinsurers and excellent internal capital generation. Partly offsetting factors in the balance sheet strength assessment include the captive’s moderate reliance on reinsurance and its concentrated asset base, with a loan provided by Rembrandt to Vitol that represents approximately one half of the captive’s total assets. The risks associated with this loan are mitigated somewhat by terms that allow it to be redeemed on short notice, along with the good financial condition of Vitol itself.

“Rembrandt’s strong operating performance is demonstrated by its five-year average return on capital of 12.9% [2014-2018] and is driven primarily by its good underwriting results, with a five-year average combined ratio of 23.7% [2014-2018]. Operating results are further supported by stable, albeit modest, investment returns. Rembrandt’s business profile assessment reflects the company’s concentrated insurance portfolio, with approximately 90% of its premiums derived from marine cargo and liability risks. The captive’s ERM framework is considered to be developed, and is embedded in Vitol’s risk management processes.”

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