AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” (Excellent) of GreenStars BNP Paribas S.A. (GreenStars) (Luxembourg), a subsidiary of BNP Paribas SA (BNP Paribas). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect GreenStars’ balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The ratings also consider, in the form of rating lift, AM Best’s expectation that BNP Paribas will provide financial support to the company, if needed. The shareholder has allowed GreenStars to retain all of its earnings since its incorporation in 2009.
GreenStars’ balance sheet strength is supported by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects GreenStars’ risk-adjusted capitalisation to remain at the strongest level, supported by good internal capital generation and low net underwriting leverage. Dependence on reinsurance is high, although the associated credit risk is mitigated partially by GreenStars’ diversified and well-rated reinsurance panel.
GreenStars’ strong operating performance is demonstrated by its five-year average return on capital and surplus of 15.7%. Historical performance has been driven largely by the company’s low loss experience, which has helped it obtain high inward ceding and profit commissions. AM Best expects the company’s prospective performance to remain strong, albeit subject to potential volatility stemming from weakened global macroeconomic conditions. GreenStars’ extensive reinsurance programme helps to mitigate the effect of potential claims volatility on a net basis.
GreenStars provides support for BNP Paribas’ lending operations, as a credit-risk management tool. The company’s business profile benefits from having direct access to the group’s good quality credit risks. While GreenStars is concentrated in credit insurance, its business profile assessment reflects its diversification by geography, type of credit risk and obligor.
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 use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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