AM Best has affirmed the financial strength ratings of A (excellent) and the long-term Issuer credit ratings of “a+” (excellent) of Switzerland-domiciled Solen Versicherungen AG (SVAG) and Texas-domiciled Noble Assurance Company. The outlook for the ratings is stable.
Both captives are owned by Shell, with Noble underwriting Shell’s US business and ceding 100% of its risks to SVAG, its sister company, through a quota share reinsurance agreement.
SVAG has a track record of strong operating performance, underpinned by robust underwriting results, as demonstrated by a five-year (2019-2023) average combined ratio of less than 25%.
The captive’s non-life business mostly consists of offshore and onshore property and liability risks, as well as the associated business interruption cover.
SVAG also writes a small book of life business derived from reinsurance of the group’s pension liabilities.
It’s operating performance is subject to volatility due to the captive’s exposure to high-severity, low-frequency losses, given its large net line sizes relative to its premium base.
SVAG is also exposed to elevated market risk through its management of the Shell group’s foreign currency warehousing activities, which drives a level of variability in overall earnings.
The ratings of Noble reflect its status as a member of the SVAG rating unit and a subsidiary of Shell.
SVAG’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s capital adequacy ratio (BCAR).
AM Best expects the captive’s BCAR scores to remain above the minimum required for the strongest assessment, reflecting its strategy to maintain sufficient capital buffers to absorb a series of large losses.
“The balance sheet strength assessment also factors in a concentration of assets in intragroup investments and the large gross and net line sizes provided by the captive, relative to its capital base,” the ratings agency stated.