A.M. Best Assigns Ratings to ICM Assurance Ltd

A.M. Best has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of “a-” to ICM Assurance Ltd (ICMA) (St. Michael, Barbados). The outlook assigned to both ratings is stable.

The ratings reflect ICMA’s strong risk-adjusted capitalization, favorable performance record, sound risk management capabilities, with a focus on sustaining solid capitalization and underwriting performance, and conservative balance sheet strategies. The ratings also consider ICMA’s important role as a single-parent captive and the implied support provided by its parent, CNOOC Limited (CNOOC) [ADR-traded NYSE:CEO], whose management incorporates ICMA as a core element of CNOOC’s overall risk management safety and risk mitigation programs.

ICMA is a single-parent or pure captive insurer wholly owned by CNOOC International Limited, which in turn is wholly owned by CNOOC.

Partially offsetting these positive rating factors are ICMA’s high gross loss potential due to the nature of the insurance provided, which is subject to high severity and significant dependence on reinsurance. This is partially tempered by the extensive loss control and group-wide safety programs provided by its ultimate parent, which helps to mitigate losses arising from its parent’s ordinary course of business. Extensive reinsurance protection, placed with a panel of financially strong reinsurers, also limits the company’s net exposure to shock loss events. Also noteworthy, is the significant percentage of assets loaned to its parent. However, these investments are very liquid and repayable on demand; hence, there is limited counterparty risk due to the affiliation of the two companies.

ICMA provides coverage for property damage, operators extra expense, pollution liability, business interruption and onshore and offshore liability, as well as property under construction, to CNOOC and affiliates and subsidiaries related to risks in which CNOOC has ownership interests.

ICMA has a track record of reporting consistently strong operating results. The captives’ loss experience has remained favorable due in part to no material catastrophe events, its inherent knowledge of the business it underwrites and the strong loss control programs adopted at the parent level. The risk management team conducts periodic reviews of ICMA’s potential loss exposures through an industrial risks specialist.

A.M. Best notes that despite its diversified business platform, sustaining a trend of stable earnings is a challenge for ICMA due to the nature of the business.

A.M. Best believes that ICMA is well-positioned at its current rating levels, and the ratings and outlooks are not expected to be upgraded or downgraded in the near term. However, revisions to the ratings are likely to occur if there are material and sudden changes to ownership, strategy, parental commitment or significant changes in the company’s financial condition caused by catastrophes.

A.M. 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 rating(s) that have been published on A.M. 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 visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20151020006284/en/

A.M. Best CompanyAlexander Sarfo, 908-439-2200, ext. 5779Senior Financial [e-mail] Davis, 908-439-2200, ext. 5665Assistant Vice [e-mail] Sharkey, 908-439-2200, ext. 5159Manager, Public [e-mail] Peavy, 908-439-2200, ext. 5644Assistant Vice President, Public [e-mail]