AM Best Affirms Credit Ratings of Palms Insurance Company, Limited
- Palms Insurance Company has a Financial Strength Rating of A (Excellent) and a stable outlook.
- Palms has solid risk-adjusted capitalization and consistent positive operating performance.
- Palms provides coverage primarily for the energy and utility industry and has a strong management.
- Palms underwrites insurance risks primarily from NextEra Energy and its affiliates.
- None.
The ratings reflect Palms’ balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Palms is a single-parent insurer wholly owned by
The ratings reflect Palms’ solid risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), consistent positive operating performance and conservative balance sheet strategies, as well as its strong management and significant role within the risk management structure of its parent, NEECH. The ratings also recognize Palms’ history of maintaining sufficient capital and financial resources to support its ongoing obligations.
Palms provides coverage primarily for the energy and utility industry and has high net loss potential stemming from a single, severe occurrence relative to its surplus. This is mitigated somewhat by Palms’ excellent loss history, its favorable geographic spread of risk and historically strong surplus position. Additionally, while Palms partially relies on third parties for processing, servicing and administration, Palms’ management is involved closely in these operations.
Palms has expanded and enhanced its underwriting structure with necessary talent and expertise to support the expansion into non-affiliate business. Although Palms participates in a range of coverages of its parent company for very large risks, these risks are underwritten with tight guidelines and significant loss control measures by the insured affiliates, as evidenced by favorable loss ratios over the past five years. Prospective underwriting performance still remains subject to volatility, due to Palms’ exposure to low frequency, high severity claims in its property program, which includes coverage for NextEra’s renewable energy interests and other non-affiliate coverage.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in
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.
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Associate Director
+1 908 439 2200, ext. 5406
fred.eslami@ambest.com
Associate Director
+1 908 439 2200, ext. 5394
dan.teclaw@ambest.com
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Managing Director,
+1 908 439 2200, ext. 5204
jeffrey.mango@ambest.com
Source: AM Best
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