OLDWICK, NJ–(BUSINESS WIRE)–AM Best Affirmed Palms Insurance Company, Limited (Palms) (George Town, Cayman Islands) financial strength rating of A (Excellent) and long-term issuer credit rating of “a” (Excellent). The outlook for these Credit Ratings (ratings) is stable.
The ratings reflect Palms’ balance sheet strength, which AM Best rates as the strongest, as well as its adequate operating performance, neutral business profile and appropriate management of business risks.
Palms is a single parent insurer wholly owned by NextEra Energy Capital Holdings, Inc. (NEECH), which in turn is wholly owned by NextEra Energy, Inc. (NextEra) [NYSE: NEE]. Palms underwrites insurance risks primarily with NextEra and its affiliates, providing direct and assumed specialty coverage of property, accident, workers’ compensation, automobile liability and employers’ liability. Palms also provides property and casualty insurance to certain unaffiliated entities.
The ratings reflect Palms’ strong risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR), consistent positive operating performance and conservative balance sheet strategies, as well as its strong management and significant role within the risk management structure of its parent company, NEECH. The ratings also recognize Palms’ history of maintaining sufficient capital and financial resources to support its ongoing obligations.
Palms provides coverage primarily for the energy and utilities industry and has a high net loss potential from a single severe event relative to its surplus. This is somewhat mitigated by Palms’ excellent loss history, favorable geographic risk spread and historically strong surplus position. Additionally, while Palms relies in part on third parties for processing, maintenance and administration, Palms management is closely involved in these operations.
Palms has expanded and enhanced its underwriting structure with the talent and expertise to support expansion into unaffiliated businesses. Although Palms participates in a range of cover from its parent company for very large risks, these risks are underwritten with strict guidelines and extensive loss control measures by insured affiliates, as evidenced by favorable loss ratios over the course of the year. of the past five years. Forward-looking underwriting performance remains subject to volatility, due to Palms’ exposure to infrequent and very severe claims in its real estate program, which includes coverage for NextEra’s renewable energy interests and other coverages. not affiliated.
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