OLDWICK, N.J.–(BUSINESS WIRE)–A.M. Best has affirmed the Financial Strength Rating of A
(Excellent) and the Long-Term Issuer Credit Rating of “a” of Palms
Insurance Company, Limited (Palms) (George Town, Cayman Islands).
The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Palms’ solid risk-adjusted capitalization, history
of consistently strong operating performance and conservative balance
sheet strategies, as well as the captive’s strong integration within the
risk management structure of its parent, NextEra Energy Capital
Holdings, Inc. (NEECH). The ratings also recognize Palms’ history of
maintaining sufficient capital and financial resources to support its
Partially offsetting these positive rating factors are Palms’ limited
market scope and high net loss potential stemming from a single, severe
occurrence relative to surplus. Nevertheless, this is somewhat mitigated
by the company’s excellent loss history, favorable geographic spread of
risk and the history of support of Palms’ strong surplus position by its
parent. Additionally, while Palms depends on third parties for
processing, servicing and administration, the senior management of its
ultimate parent, NextEra Energy, Inc. (NEE) [NYSE: NEE], is
closely involved in these operations.
Palms is a single parent or pure captive insurer wholly owned by NEECH,
which in turn is wholly owned by NEE. Palms accepts insurance risks only
from NEE and its affiliates, providing specialized direct and assumed
property and casualty coverages, workers’ compensation, automobile
liability, employers’ liability and property risk. Although Palms
participates in a range of coverages for very large risks, these risks
are underwritten with tight guidelines and significant loss control
measures by the insured affiliates as evidenced by favorable loss ratios
over the past five years. Nonetheless, prospective underwriting
performance remains subject to volatility, due to exposure to low
frequency, high severity claims in its property program, as the industry
it operates in is fundamentally volatile.
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 Credit Ratings 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 see A.M. Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and A.M. Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and A.M. Best Rating
Action Press Releases.
A.M. Best is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its
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Alexander Sarfo, +1-908-439-2200, ext. 5779
A. Davis, +1-908-439-2200, ext. 5665
Sharkey, +1-908-439-2200, ext. 5159
Manager, Public Relations
Peavy, +1-908-439-2200, ext. 5644
Director, Public Relations