AM Best Affirms Credit Ratings of Saturn Insurance Inc.

AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Saturn Insurance Inc. (Saturn) (Burlington, VT). Saturn is a captive insurer of BP p.l.c. (bp) [NYSE: BP], an integrated global energy company. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Saturn’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also consider rating enhancement from Saturn’s affiliate, Jupiter Insurance Limited, which is the largest captive of the bp group and provides substantial reinsurance support to Saturn.

Saturn’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level on a standard basis, as measured by Best’s Capital Adequacy Ratio (BCAR). The assessment factors in Saturn’s small capital base relative to its large underwriting limit, which exposes the captive’s risk-adjusted capitalisation to potential volatility. In addition, Saturn has high dependence on reinsurance to protect its balance sheet against high-severity, low-frequency losses. In particular, Saturn has high reliance on the reinsurance cover provided under the United States’ Terrorism Risk Insurance Act (TRIA) to offer large gross terrorism limits to bp. Saturn’s investments are highly concentrated, with over 99% accounted for by short-term intragroup deposits placed with two bp subsidiaries at year-end 2024.

Saturn has a five-year (2020-2024) weighted average return-on-equity ratio of 4.8%. Earnings are driven by healthy underwriting profitability as demonstrated by the captive’s five-year (2020-2024) weighted average combined ratio of 34.8%. AM Best expects Saturn’s earnings to remain relatively modest and subject to potential volatility given the large net policy limits it offers compared with its premium base.

Saturn’s business profile is assessed as limited by AM Best, reflecting its small and concentrated portfolio of high-risk business derived from the bp group in the United States. The captive’s portfolio consists mainly of terrorism cover for TRIA-certified property damage/business interruption insurance, workers’ compensation insurance (including terrorism), as well as a small amount of environmental protection and certificate of financial responsibility insurance covers. The captive’s gross written premium has decreased by approximately 80% over the last decade, driven by declining insured values due to bp’s divestments, lower oil prices and soft market conditions.

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 specialising 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.

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