AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a+” (Excellent) from “a” (Excellent) and affirmed the Financial Strength Rating (FSR) of A (Excellent) of ICM Assurance Ltd (ICMA) (Barbados). The outlook of the Long-Term ICR has been revised to stable from positive while the outlook of the FSR is stable. ICMA is a single-parent captive insurer, wholly owned by CNOOC International Limited, which is in turn wholly owned by CNOOC Limited (CNOOC), the ultimate parent.

The Credit Ratings (ratings) reflect ICMA’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management, augmented by rating enhancement that it receives from its ultimate parent, CNOOC.

The upgrade of the Long-Term ICR reflects ICMA’s favorable results, with significant net operating profits recorded over the past five years. On average, the captive’s loss experience compares favorably with its peers and the overall industry due to the absence of material catastrophe events and management's expertise and knowledge of the written business. Further, ICMA’s earnings benefit from its inherently low expense structure and generally favorable loss reserve development.

ICMA’s balance sheet strength is supported by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as its strong liquidity, low underwriting leverage and consistent reserving practices. Due to the nature of the insurance ICMA provides for CNOOC’s oil and gas exploration, it is subject to high severity losses. However, this exposure is tempered by the extensive loss control and group-wide safety programs across the enterprise. Reinsurance protection, placed with a panel of financially strong reinsurers, limits ICMA’s net exposure to shock losses. Also noteworthy is the significant percentage of assets that ICMA loans its parent. However, the loan is repayable on demand with limited counterparty risk due to the affiliation and the aligned interests of the companies.

The neutral business profile assessment considers its role as a single-parent captive providing global liability and property coverages to CNOOC and affiliates. ICMA’s ratings receive lift from the ultimate parent due to implicit and explicit support, as well as other inherent benefits the captive receives from CNOOC. ICMA is considered a core element of CNOOC’s overall risk management and risk mitigation program and serves a critical role in delivering coverage and access to reinsurance for specific risks.

AM 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 AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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