IIL is the single-parent captive of Inpex Corporation, Japan’s largest oil and gas exploration and production company.
The ratings reflect IIL’s strong risk-adjusted capitalisation and favourable operating performance. The ratings also take in consideration IIL’s affiliation with and importance to its ultimate parent.
Partially offsetting these ratings is the captive’s concentrated investment portfolio, which consists mainly of loan-back to its parent, whose credit profile has weakened over the past few years, due mainly to the downturn in the oil and gas markets.
In addition, it is also exposed to high credit risk, as it writes sizeable gross risks relative to its capital.
According to A.M. Best, positive rating actions could occur if IIL continues to maintain its strong level of risk-adjusted capitalisation along with an improved credit profile of its parent.
Negative ratings could occur if there is a substantial increase in losses caused by a material shift in risk appetite or significant erosion of capital.