AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of "a" (Excellent) of Transmonde Services Insurance Company Limited (Transmonde) (Hamilton, Bermuda). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Transmonde's balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
Partially offsetting these rating factors are Transmonde's high retentions and concentration in liability lines with significant loss severity potential, although the company has experienced historically favorable loss experience. Additional offsetting factors include the limited market profile as a single-parent captive that derives all its business from its parent company. Transmonde provides professional, general and pollution liability coverages to members of the International Association of Superintendents, which are subsidiaries of SGS SA (SGS), a publicly traded Swiss company SGSN.
Transmonde has maintained very conservative underwriting leverage ratios, as surplus has remained strong to support its business volumes. Historically, surplus growth is the result of retained earnings from highly profitable operating results driven by excellent underwriting performance. The company has posted low loss and loss adjustment ratios, which reflect SGS' effective risk management. Its relatively high per-occurrence retentions are mitigated by significant deductibles and conservative reserving practices.
While the rating outlooks are stable, factors that could lead to negative rating action include a material deterioration of risk-adjusted capitalization or operating performance, decreased strategic importance to the group, or high dividend demands from the parent company depleting capital.
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.
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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