AM Best confirms the credit ratings of Blue Whale Re Ltd.
OLDWICK, NJ – (BUSINESS WIRE) –AM Best confirmed the financial strength rating of A (Excellent) and the issuer’s long-term credit rating of “a +” (Excellent) of Blue Whale Re Ltd. (Blue Whale) (Burlington, VT). The outlook for these credit ratings (ratings) is stable.
The ratings reflect the strength of Blue Whale’s balance sheet, which AM Best considers very strong, as well as its strong operational performance, neutral business profile and appropriate enterprise risk management (ERM).
The ratings also reflect Blue Whale’s strategic position as a captive insurer of Pfizer Inc. (Pfizer) [NYSE: PFE], a leading global pharmaceutical company. As Blue Whale insures or reinsures Pfizer’s global real estate exposures, it plays an important role in Pfizer’s overall ERM and takes a critical role in protecting Pfizer business assets.
The stable outlook reflects AM Best’s view that the business of the company will continue to generate operating results that will generate favorable capitalization for ratings.
Blue Whale’s capitalization is very strong, even though it depends on its parent company. It operates at conservative underwriting leverage levels; however, it offers hedges with extremely high limits and its gross exposures per claim are high. Although Blue Whale enjoys reinsurance protection, it is heavily reliant on reinsurance, with very large net retentions. Its reinsurance is provided by a large panel of reinsurers who provide significant capacity. AM Best takes into consideration the quality of the reinsurers, as well as the substantial financial resources and support available to the captive within the Pfizer group.
Due to the nature of the relationship between Blue Whale and Pfizer, changes in Pfizer’s credit profile may impact Blue Whale’s ratings. Pfizer’s market-based credit risk measures indicate general strength and take into account the company’s strategic shift towards newer pharmaceuticals, as Pfizer has completed the divestiture of its over-the-counter pharmaceutical business and the contribution of its mature pharmaceuticals to a joint venture. Based on the parent company’s refocused business strategy, as well as Blue Whale’s current reinsurance program, Blue Whale appears well positioned to continue to meet Pfizer’s insurance needs.
Blue Whale’s operating results and reserve levels returned to historic levels in 2019, following the final resolution of Hurricane Maria claims. Insurance requirements for the company’s property are reduced following Pfizer’s divestiture of Upjohn, including production and warehousing facilities in the Caribbean.
AM Best remains the leading rating agency for alternative risk transfer entities, with more than 200 such vehicles rated in the United States and around the world. To view Best’s current credit ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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