A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of "a-" of ICM Assurance Ltd (ICMA) (St. Michael, Barbados). The outlook of these Credit Ratings (ratings) is stable.

The rating affirmations reflect ICMA's overall balance sheet strength, which is categorized as strongest by A.M. Best, underpinned by solid level of risk-adjusted capitalization, favorable performance record, limited business profile and appropriate risk management capabilities with a focus on sustaining solid capitalization and underwriting performance, as well as conservative balance sheet strategies. The ratings also consider ICMA's important role as a single-parent captive and the implied support provided by its parent, CNOOC Limited (CNOOC) [ADR-traded NYSE: CEO], whose management incorporates ICMA as a core element of CNOOC's overall risk management safety and risk mitigation programs.

ICMA is a single-parent or pure captive insurer wholly owned by CNOOC International Limited, which in turn is wholly owned by CNOOC.

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. This is tempered partially by the extensive loss control and group-wide safety programs provided by its ultimate parent, which help mitigate losses arising from its parent's ordinary course of business. Extensive reinsurance protection, placed with a panel of financially strong reinsurers, also limits ICMA's net exposure to shock loss events. Also noteworthy is the significant percentage of assets that ICMA has loaned to its parent. These investments are very liquid and repayable on demand so there is limited counterparty risk due to the affiliation of the two companies.

ICMA has generally reported consistently adequate operating results. While favorable operating performance has been good in the most recent five years, underwriting results are volatile and susceptible to occasional outsized losses. This was evidenced in 2016 when ICMA recorded an underwriting loss of approximately USD 33 million, which eroded USD 21 million or 5% of the company's capital and surplus. The captive's loss experience has remained favorable due in part to no material catastrophe events, its inherent knowledge of the business it underwrites and the strong loss control programs adopted at the parent level. The risk management team conducts periodic reviews of ICMA's potential loss exposures through an industrial risks specialist.

A.M. Best notes that despite its diversified business platform, sustaining a trend of stable earnings is a challenge for ICMA due to the nature of the business.

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 risk transfer insurance market, please visit www.ambest.com/captive.

This press release relates to Credit Ratings that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings . For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases .

A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.

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