AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of "a+" of Solen Versicherungen AG (SVAG) (Switzerland) and Noble Assurance Company (Noble) (Texas, U.S.A.). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect SVAG's balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings factor in rating enhancement from SVAG's ultimate parent, Royal Dutch Shell plc (Shell), reflecting SVAG's importance as a group risk management tool. Shell provides support to SVAG in the form of a contingent capital facility that would allow SVAG to replenish its capital position quickly following a sequence of very large losses.
SVAG's balance sheet strength is underpinned by its risk-adjusted capitalisation, which improved from the very strong to the strongest level at year-end 2019, as measured by Best's Capital Adequacy Ratio (BCAR). The improvement in risk-adjusted capitalisation reflected an increase in available capital in 2019, due to higher retained earnings and an increase in unrealised investment gains. Risk-adjusted capitalisation remains supported by good internal capital generation and a relatively stable risk profile. The balance sheet strength assessment takes into consideration the concentration of assets in intra-group deposits at year-end 2019.
SVAG has a track record of strong operating performance, largely driven by robust underwriting results, as demonstrated by a five-year (2015-2019) weighted average combined ratio of 24.2%. Prospective performance is subject to volatility from exposure to high severity, low frequency losses, reflecting the type of business underwritten and the captive's large net maximum line sizes. SVAG does not purchase outward reinsurance cover for the majority of its risks.
SVAG's business profile assessment reflects its key role in its ultimate parent's overall risk management framework, as Shell's principal captive. The captive's non-life business largely consists of offshore and onshore property and liability risks, as well as the associated business interruption cover. SVAG also reinsures life business emanating from the group's pension liabilities.
The ratings of Noble reflect its status as a member of the SVAG rating unit and a subsidiary of Shell. As a captive domiciled in Texas, U.S.A., Noble underwrites Shell's U.S. business and cedes 100% of its risks to SVAG, its sister company, through a quota share reinsurance agreement.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best's Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.
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