LONDON–(BUSINESS WIRE)–#insurance—AM Best has affirmed the Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Rating of “a” (Excellent) of Jupiter Insurance Limited (Jupiter) (Guernsey), a captive insurer of BP p.l.c. (bp) [NYSE: BP], an integrated global energy company. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Jupiter’s 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. In addition, the ratings factor in a neutral impact from the company’s ultimate parent, bp.
Jupiter’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects Jupiter’s BCAR scores to remain comfortably above the minimum required for the strongest assessment level, reflecting its strategy to maintain sufficient capital buffers to absorb potential volatility stemming from the company’s exposure to high-severity, low-frequency losses. Jupiter does not purchase any outward reinsurance cover, supporting bp’s current strategy to retain risks when possible. A partially offsetting factor is the captive’s concentrated investment portfolio, of which 99% is accounted for by short-term intragroup deposits.
Jupiter has reported strong operating results over the past five years (2020-2024), demonstrated by a weighted average return-on-equity ratio of 9.3%. Earnings are supported by robust underwriting profits, as evidenced by a weighted average combined ratio of 21.9%, and are supplemented by solid investment income generated from the heightened interest rate environment in recent years. Prospective operating performance is subject to volatility arising from the company’s exposure to high-severity, low-frequency losses, driven by the large line sizes offered by the captive, relative to its premium income.
The captive holds a neutral business profile, reflecting its key role within bp’s overall risk management framework, as its principal captive insurer. Jupiter’s underwriting risks consist mainly of onshore and offshore property damage and business interruption covers. Following a decade of declining premium levels owing to soft rate environment and divestments by bp, Jupiter’s premium income saw a return to growth in 2023 and 2024 supported by new insurable risks being placed with the captive. Moderate premium growth is expected to continue over the medium-term, supported by bp group’s planned asset investments.
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 Performance Assessments, 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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