AMSTERDAM–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” of GreenStars BNP Paribas S.A. (GreenStars) (Luxembourg), a subsidiary of BNP Paribas S.A. (BNP Paribas). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect GreenStars’ balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The ratings also consider, in the form of rating lift, AM Best’s expectation that BNP Paribas will provide financial support to the company if needed. The shareholder has allowed GreenStars to retain all of its earnings since its incorporation in 2009.
GreenStars’ balance sheet strength is supported by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects GreenStars’ risk-adjusted capitalisation to remain at the strongest level, supported by good internal capital generation and low net underwriting leverage. The company holds capital buffers to cushion against the effect of a heightened insolvency environment. Dependence on reinsurance is high, although the associated credit risk is mitigated partially by GreenStars’ diversified and well-rated reinsurance panel.
GreenStars’ strong operating performance is demonstrated by its five-year average return on capital and surplus of 16.5%. Historical performance has been driven largely by the company’s low loss experience, which has helped it obtain high inwards ceding and profit commissions. Prospective performance is subject to volatility due to the company’s exposure to heightened loss activity in years of economic downturn and to the impact of fluctuations in the availability of reinsurance capacity. AM Best expects GreenStars’ premium income and loss experience to be negatively affected in 2020 and 2021 by the severe global economic downturn caused by the COVID-19 pandemic. However, on a net basis, the company’s result is well-protected by extensive reinsurance.
GreenStars provides support for BNP Paribas’ lending operations, as a credit-risk management tool. The company’s business profile benefits from having direct access to the group’s good quality credit risks. While GreenStars is concentrated in credit insurance, its business profile assessment reflects its diversification by geography, type of credit risk and obligor.
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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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