AM Best has reaffirmed Jupiter Insurance Limited’s Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Rating of “a” (Excellent). Jupiter Insurance, a captive insurer for BP p.l.c., has a stable outlook for these ratings.
The ratings reflect Jupiter’s very strong balance sheet strength, robust operating performance, neutral business profile, and effective enterprise risk management. The ratings also account for a neutral impact from BP, Jupiter’s owner.
Jupiter’s balance sheet strength is supported by its top-tier risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best anticipates that Jupiter’s BCAR scores will remain well above the threshold for the strongest rating, given its strategy to maintain adequate capital buffers to manage potential volatility from infrequent, high-severity losses. Jupiter does not purchase outward reinsurance, aligning with BP’s strategy to retain risks when possible. However, a notable factor is the captive’s concentrated investment portfolio, with 99% of investments in short-term intragroup deposits guaranteed by BP and held with a BP subsidiary as of the end of 2023.
Over the past five years (2019-2023), Jupiter has demonstrated strong operating results, highlighted by a weighted average return-on-equity ratio of 9.0%, largely due to solid underwriting profits. Future operating performance may be volatile due to the exposure to high-severity, low-frequency losses and large line sizes relative to the captive’s premium base.
Jupiter plays a crucial role in BP’s risk management framework as its primary captive insurer. The company underwrites risks mainly related to onshore and offshore property damage and business interruption. Although BP’s divestments, lower oil prices, and soft market conditions have led to a 67% decrease in Jupiter’s gross written premium over the past decade, recent years have seen a rebound, with significant premium growth reported in 2022 and 2023.
As a risk management tool, Jupiter helps BP optimize its insurance coverage in terms of scope and cost, and provides substantial reinsurance to its sister company, Saturn Insurance Inc.
AM Best continues to lead in rating alternative risk transfer entities, with over 200 such entities rated globally. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, visit www.ambest.com/captive.
This press release pertains to Credit Ratings published on AM Best’s website. For full rating information, including disclosures and details on the office responsible for each rating, visit AM Best’s Recent Rating Activity web page. For more information on the use and limitations of Credit Rating opinions, consult the Guide to Best’s Credit Ratings. For proper use of Best’s Credit Ratings and related assessments, refer to the 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, it operates in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore, and Mexico City. For more information, visit www.ambest.com.
