According to A.M. Best, the rating affirmations reflect the captive’s “historically excellent risk-adjusted capitalisation, consistent operating profitability driven by favourable underwriting results, conservative reserve levels and effective enterprise risk management controls”.
Partially offsetting these rating factors are Bison’s volatile underwriting results due to its low-frequency, high-severity risk profile, coupled with its high net retained limits relative to its available capital.
Bison insures select risks for Duke Energy, providing a variety of coverage in property and casualty lines of business.
While favourable operating performance has been reported consistently in the last five years and in Q1 2017, underwriting results are volatile, which puts Bison at risk of occasional outsized losses, A.M. Best said.
A.M. Best said: “Duke Energy’s risk management team takes a holistic approach to managing its risks and utilises the captive as an integral part of this process. Bison’s long-term growth opportunities primarily depend on Duke Energy’s business success.”