LONDON–(BUSINESS WIRE)–AM Best has confirmed the Financial Strength of A- (Excellent) and the Long-Term Credit Rating of “a-” (Good) for Saturn Insurance Inc. (Saturn) (Burlington, VT). Saturn is owned by BP plc (bp), a global conglomerate. The loan format (parts) is fixed.
The ratings reflect the strength of Saturn’s balance sheet, which AM Best rates as strong, as well as reasonable operating performance, a limited business history and sound business management. The ratings also take into account a rating upgrade from Saturn’s subsidiary, Jupiter Insurance Limited, which is a major shareholder of the bp group and provides extensive support services to Saturn.
Saturn’s balance sheet strength is measured by its strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Some of the downsides include the captive’s high investment and heavy reliance on reinsurance to protect its portfolio against large, infrequent losses. The calculation also allows the company to have a small capital, which, considering the large margin provided, shows how much risk it can cause. Funds are very stable, and more than 99% at the end of 2021 had three inter-group deposits with two bp subsidiaries, North America Funding Company and BP International Limited, with maturities of one month to one year. Therefore, AM Best considers that Saturn’s income is closely related to the history of bp.
Saturn has a record of strong profit margins, as shown by the five-year (2017-2021) weighted average of 56%, which was achieved despite the fact that the wages of many employees (WC) affected the work in 2017. This led to a combined increase, as AM Best calculated, 129% in 2017, showing the transparency of the prisoner’s actions to be flexible, which is a useful factor in the evaluation. Efficiency and cost savings have contributed to a 72% growth in revenue and margins since the company’s inception in 2011.
AM Best assesses Saturn’s business history as underperforming, reflecting its small and stable portfolio of high-risk businesses from the bp group in the United States. Saturn’s profile includes terrorism cover for property damage and business interruption, WC insurance, environmental protection and financial responsibility certificate. Reduced insurance rates due to lower bp, lower oil prices and a soft market has led to a drop in written premiums for captives by nearly 81% since 2014.
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