Standard & Poor’s Ratings Services announced that it has affirmed its “AA+” long-term counterparty credit and insurer financial strength ratings on Guernsey-based Jupiter Insurance Ltd., the wholly owned captive insurer of U.K.-based oil major BP PLC (also rated ‘AA+’/Stable/A-1+) with a stable outlook.
“The ratings on Jupiter are based on its status as the captive insurer of BP,” stated S&P credit analyst Matthew Day. “Jupiter qualifies as a captive insurer under Standard & Poor’s rating criteria and, as such, is rated at a level commensurate with the ratings on its ultimate parent.”
S&P noted that as the “sole active captive insurer of the BP group, Jupiter forms an integral part of the group’s overall risk management strategy. The commitment of Jupiter’s ultimate parent, BP, to its captive was underlined by an injection of capital by BP into Jupiter to enhance its underwriting capabilities in October 2003.
“Stand-alone characteristics not directly relating to the public ratings include Jupiter’s extremely strong capitalization and very strong investments. These positive factors are partly offset by Jupiter’s strong but potentially volatile operating performance and restricted competitive position.
“The stable outlook on Jupiter reflects that on its ultimate parent, BP. BP is expected to keep Jupiter capitalized at a minimum of 4x the estimated maximum loss. Jupiter is expected to remain profitable at the underwriting level, barring any catastrophic losses. Furthermore, Jupiter is not expected to underwrite any third-party business, and should remain core to the BP group’s risk management strategy.”
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