LONDON–(BUSINESS WIRE)–AM Best has confirmed a Financial Strength Rating of A (Excellent) and a Long Term Credit Rating of “a” (Good) for Rembrandt Insurance Company, Ltd. (Rembrandt) (Bermuda), the captive (re)insurer of Vitol Holding BV (Vitol), a group that deals in oil-related products. The loan format (parts) is fixed.
These ratings reflect the strengths of Rembrandt’s paper, which AM Best considers to be very strong, as well as its strong performance, small business history and sound business management.
Rembrandt’s balance sheet strength is supported by risk-adjusted capitalization at a very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects Rembrandt’s risk-adjusted earnings to remain very strong, supported by low-cost underwriting, an external recapitalization program put in place by a group of financial advisors and excellent internal investment. Other factors that reduce the strength of the bank’s assessment include the central dependence of the captive on reinsurance and its fixed assets, and the loan granted by Rembrandt to Vitol which represents almost half of the total amount of the captive by the end of 2021. The risk associated with this loan is somewhat reduced and terms that allow for short-term redemption, along with Vitol’s own good financial situation. In addition, Rembrandt has enough money to pay back what he wants.
Rembrandt’s strong performance is reflected by its five-year return on investment of 16.3% (2017-2021) and is mainly driven by its good underwriting results, with a five-year weighted average of 44.5% over the same period. . Operating results are also supported by stable, albeit low, returns.
An analysis of Rembrandt’s business history reveals its importance to its parent, as an integrated part of Vitol’s risk management system; however, the captive only takes a small portion of the parent’s insurance, writing around 25% of the total insurance premiums. Rembrandt has a strong insurance portfolio, with around 90% of its premiums coming from marine cargo and casualty risks.
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