A.M. Best Co. has upgraded the issuer credit rating to “a+” from “a” and affirmed the financial strength rating of A (Excellent) of Blue Whale Re Ltd. (Blue Whale) (Burlington, VT). The outlook for both ratings is stable.
The ratings reflect Blue Whale’s strong capitalization and its conservative operating strategy. It also considers the company’s critical and central role and favorable profile as part of the Pfizer Group, as well as the excellent performance of its operations. Partially offsetting these positive rating factors are Blue Whale’s very large gross and net underwriting exposures to property losses and its dependence on reinsurance.
Blue Whale is a single parent captive of Pfizer Inc. (Pfizer) [NYSE: PFE], the largest pharmaceutical company in the world. As it (re)insures Pfizer’s global property exposures, Blue Whale plays an important position in Pfizer’s overall enterprise risk management and assumes a critical role in protecting the Pfizer Group’s assets. Thus, Blue Whale benefits from Pfizer Group’s extensive risk management and loss control programs.
The captive operates at conservative underwriting leverage levels; however, it provides coverages with extremely large limits and its gross exposures per loss occurrence are elevated. Although Blue Whale benefits from reinsurance protection, its net retentions also remain very substantial. Reinsurance is provided by a large panel of reinsurers, and Blue Whale relies on significant capacity to be able to support its obligations. As such, it is heavily dependent on reinsurance. Nevertheless, A.M. Best recognizes the quality of the reinsurers and the substantial financial resources and support available to the captive as part of the Pfizer Group.Positive rating actions could occur if there is a sustainable and long-term improvement in the operating performance and capital strength of Blue Whale and Pfizer. Conversely, negative rating actions could occur as a result of material operational and performance issues at both Blue Whale and Pfizer. Rating pressure would be likely if there were any adverse changes to many regulatory standards to which Pfizer has adhered. The potential for future acquisitions and the associated integration risks and company profile changes could lead to both positive and/or negative pressure on the ratings, depending on the acquisition details.
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