A.M. Best Co. has affirmed the financial strength rating of A
(Excellent) and issuer credit rating of “a+” 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 reinsurance 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 $100 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/or its outlook
revised within the next year as its operating performance and capital
position have already been considered in A.M. Best’s 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 risk transfer 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. Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
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Copyright Business Wire 2013