AM Best assigned a financial strength rating of A- (excellent) and a long-term issuer credit rating of âa-â (excellent) to
The ratings reflect the strength of Jamestown’s balance sheet, which AM Best considers to be very strong, as well as its adequate operational performance, limited business profile and appropriate enterprise risk management (ERM).
The strength of Jamestown’s balance sheet is underpinned by its risk-adjusted capitalization which is at the highest level, as measured by Best’s capital adequacy ratio (BCAR). The company’s balance sheet also benefits from a strong history of retained earnings and its effective use of third-party reinsurance to transfer risk. However, the company’s extensive reinsurance program exposes Jamestown to a high degree of credit risk, which is partially mitigated by its portfolio of financially strong and well-rated reinsurers. Jamestown also benefits from the explicit support of its parent company,
The operating performance of the company is largely the result of a constant stream of dividend income and interest income, which more than offsets any negative net underwriting deficit. Jamestown cedes a substantial portion of its business to reinsurers and as a result, underwriting results are modest compared to the investment gains of the company, allowing Jamestown to secure strong earnings each year.
As a single-parent captive company, the company’s mission is to provide (re) insurance coverage on certain property, well control, re-drilling, pollution and liability risks from its ultimate parent company, Hess Corporation. . The captive offers underwriting flexibility to the parent company by offering it access to the reinsurance market and stable pricing. Due to the global reach of the ultimate parent company, the risks of the captive are partly distributed geographically; however, the captive offers very limited lines of coverage, which contributes to the limited commercial profile of the company.
The company has an appropriate ERM program that is well integrated with that of the parent organization, resulting in excellent risk identification and mitigation processes.
AM Best remains the main rating agency for alternative risk transfer entities, with more than 200 of these vehicles rated in
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Source: AM Best