ICMA is the single-parent captive insurer of CNOOC International, which is wholly owned by CNOOC.
The ratings reflect ICMA’s overall balance sheet strength, as well as its solid level of risk-adjusted capitalisation, favourable performance record, limited business profile and appropriate risk management capabilities.
They also consider ICMA’s role as a single-parent captive and the implied support provided by CNOOC, whose management incorporates ICMA as a core element of CNOOC’s overall risk management safety and risk mitigation programmes.
Partially offsetting these positive rating factors are ICMA’s high gross loss potential due to the nature of the insurance provided for oil and gas exploration, which is subject to high severity and significant dependence on reinsurance.
According to the rating agency, ICMA has generally reported consistently adequate operating results.
It suggested that although favourable operating performance has been good in the most recent five years, underwriting results are “volatile and susceptible to occasional outsized losses”.
A.M. Best explained that despite its diversified business platform, “sustaining a trend of stable earnings is a challenge for ICMA due to the nature of the business”.