A.M. Best Co. has upgraded the issuer credit rating to “a+” from “a” and affirmed the financial strength rating of A (Excellent) of BNY Trade Insurance, Ltd. (BNY Trade) (Hamilton, Bermuda). The outlook for both ratings is stable. The rating actions reflect BNY Trade’s strong capitalization, consistently positive operating results, conservative operating strategy and robust enterprise risk management (ERM) framework as it follows its parent, The Bank of New York Mellon Corporation’s (BNY Mellon) [NYSE: BK], ERM practices. The ratings also recognize BNY Trade’s excellent business position, as it has close ties to BNY Mellon, a leading global financial services company. Partially offsetting these positive rating factors are BNY Trade’s limited market scope, product mix and dependence on third parties for processing, servicing and administration. An additional offsetting rating factor is BNY Trade’s large (gross) underwriting exposure as it offers high gross insurance limits and insures excess bankers’ professional liabilities with substantial insured values. BNY Trade provides comprehensive re/insurance coverage/products to BNY Mellon. The company’s reinsurance has been placed with the world’s significant providers and it benefits from BNY Mellon’s significant financial resources, extensive risk mitigation and the safety programs, which have been implemented throughout the organization. As BNY Trade fully cedes assumed risk under primary bankers’ professional coverages to the commercial market, its exposure to net underwriting losses is minimal. BNY Trade’s projected operating results indicate favorable returns, and its surplus base of over $98 million is more than adequate to support the company’s asset and credit risk exposure. While BNY Trade’s excess bankers’ professional program offers significant insured values (considering the high coverage limits offered), the net impact could be burdensome. Nevertheless, A.M. Best recognizes the low probability of such events. The company's ratings are not expected to be upgraded and its outlook revised within the next year as its operating performance and capital position have already been considered in the ratings process. Conversely, any material adverse deviations with regard to management, earnings, capitalization or risk profile could potentially undermine the stability of the company’s ratings. In addition, deterioration in the credit profile of BNY Mellon could impact BNY Trade's ratings.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world.For current Best’s Credit Ratings and independent data on the captive and alternative insurance market, please visit www.ambest.com/captive. The methodology used in determining these ratings is Best’s Credit Rating Methodology , which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Alternative Risk Transfer (ART)”; “Understanding BCAR for Property/Casualty Insurers”; “Understanding Universal BCAR”; and “Catastrophe Analysis in A.M. Best Ratings.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.