AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to Jamestown Insurance Company Limited (Jamestown or the company). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Jamestown’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
Jamestown’s balance sheet strength is underpinned by its risk-adjusted capitalization that is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s balance sheet also benefits from a strong track record of retained earnings and its effective utilization of third-party reinsurance to transfer risk. However, the company’s extensive reinsurance program exposes Jamestown to a high degree of credit risk, which is mitigated partially by its panel of financially strong and highly rated reinsurers. Jamestown also benefits from the explicit support from its parent company, Hess Oil and Gas Holdings, Inc., in the form of a large loan receivable from the parent.
The company’s operating performance is largely the result of a steady flow of dividend income and interest income, which more than offsets any negative net underwriting shortfalls. Jamestown cedes a substantial portion of its business to reinsurers and therefore, underwriting results are modest in comparison with the company’s investment gains, which allows Jamestown to lock in healthy profits each year.
As a single parent captive, the company’s mission is to provide (re)insurance coverage on certain property, control of well, redrill, pollution and liability risks of its ultimate parent, Hess Corporation. The captive provides underwriting flexibility to the parent by offering it access to the reinsurance market and stable pricing. Due to the global reach of the ultimate parent, the captive’s risks have some spread geographically; however, the captive offers very limited lines of coverage, which contributes to the company’s limited business profile.
The company benefits from an appropriate ERM program that is well-integrated with that of the parent organization, resulting in excellent risk identification and mitigation processes.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and 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.
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Robert Gabriel, CPA
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Daniel J. Ryan
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