AM Best Assigns Credit Ratings to Research Insurance Company Limited

OLDWICK, N.J.--(BUSINESS WIRE)--
AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to Research Insurance Company Limited (RICL) (Bermuda). The outlook assigned to these Credit Ratings (ratings) is stable. RICL is a captive insurance company wholly owned by Battelle Memorial Institute (BMI), an Ohio-based nonprofit corporation and provider of technology-based research, management, commercialization and educational services to government and industry.

The ratings reflect RICL’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile, appropriate enterprise risk management (ERM) and one notch of rating enhancement that it receives from its ultimate parent, BMI.

RICL’s level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is assessed at the strongest level, where AM Best expects it to remain in future years. The balance sheet strength assessment also considers the company’s low investment risk profile and organic surplus growth achieved over several years. These factors are offset somewhat by the high loss limit (relative to its surplus) that the captive offers the parent.

Overall, RICL’s operating performance has been profitable as demonstrated by its five-year average combined ratio and net return on revenue measures that exceed AM Best’s commercial composite. Consistent operating profits are attributable to favorable underwriting results, and to a greater extent, solid investment income in each of the past five years which, together, have enabled the captive to grow surplus. Further, RICL’s operating performance reflects the inherent benefits of being a captive insurer as it has minimal acquisition costs and administrative expenses, driving its very favorable expense ratio.

RICL’s business profile is limited, as it writes, mainly on a claims-made basis, products and errors and omissions, umbrella policies for general and employers’ liability, professional liability, property flood deductible buy-down and environmental impairment coverage for its parent and affiliated organizations. RICL is an integral component of BMI’s ERM program as it provides specific insurance coverages to BMI, its subsidiaries and affiliates more efficiently than the traditional market. This strategic role and history in the BMI enterprise justify lift from the parent in the ratings as it indicates a committed level of implicit and explicit support as well as other inherent benefits the captive receives from BMI.

The stable outlooks reflect AM Best's expectations that RICL’s future operating performance will remain stable and strong, and that the earnings profile will support the company in continuing to provide underwriting coverage consistent with its capital and surplus position. It also reflects AM Best’s expectation that BMI’s support for the captive will not change. Negative rating action could occur if underwriting performance declines and demonstrates volatility, negatively impacting earnings and capitalization or if there is a material shift in risk profile that could undermine the stability and profitability of the company. Negative rating action could also occur if AM Best’s perception of BMI’s ability or willingness to support RICL changes.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated 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 AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Adrienne Stark
Senior Financial Analyst

+1 908 439 2200, ext. 5526

[email protected]

Christopher Sharkey
Manager, Public Relations

+1 908 439 2200, ext. 5159

[email protected]

Dan Teclaw
Associate Director

+1 908 439 2200, ext. 5394

[email protected]

Al Slavin
Communications Specialist

+1 908 439 2200, ext. 5098

[email protected]

Source: AM Best