The ratings reflect Jupiter’s balance sheet strength, which
Jupiter’s balance sheet strength is supported by its risk-adjusted capitalisation being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Offsetting rating factors include the captive’s high underwriting limits provided to a number of different locations and facilities, as well as its concentrated investment portfolio, which predominantly consists of financial instruments linked to its ultimate parent, BP.
The captive has reported strong operating results over the past five years, mainly driven by strong underwriting profits in the absence of large losses. However, softening market conditions, lower insured values due to BP’s divestments and lower oil prices have put significant downward pressure on Jupiter’s premium income. As its underwriting limits have remained unchanged, this is likely to increase the volatility in Jupiter’s prospective operating results.
Jupiter’s business profile assessment reflects its key role in BP’s overall risk management framework, as its principal captive. Jupiter’s underwritten risks consist largely of offshore and onshore property, and business interruption cover. The captive allows BP to optimise its insurance protection in terms of scope and cost. In addition, Jupiter provides reinsurance to its sister captive,
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