OLDWICK: AM 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_ad id=”31605″]The ratings reflect Palms’ balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The ratings reflect Palms’ solid risk-adjusted capitalization, history of consistently positive operating performance and conservative balance sheet strategies, as well as its significant role 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 ongoing obligations.
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.
This is somewhat mitigated by the company’s excellent loss history, favorable geographic spread of risk and Palms’ history of strong surplus position. Additionally, while Palms depends on third parties for processing, servicing and administration, the senior management of its ultimate parent, NextEra Energy, Inc. (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.
AlthoughPalms 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 renewable energy industry that it operates within is fundamentally volatile.