|[December 14, 2012]
A.M. Best Affirms Ratings of Bison Insurance Company Limited
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating of A-
(Excellent) and issuer credit rating of "a-" of Bison Insurance
Company Limited (Bison) (Charleston, SC). The outlook for both
ratings is stable.
The ratings reflect Bison's historically adequate capitalization,
generally favorable operating performance, conservative reserve levels
and effective enterprise risk management controls. The ratings also
recognize Bison's history of maintaining sufficient capital and
financial resources to support its ongoing obligations.
Partially offsetting these positive rating factors are Bison's volatile
underwriting results due to its low frequency, high severity risk
profile, coupled with its high net retained limits relative to its
available capital. Additionally, the continually changing risk profile
of Bison's primary insureds directly affects its risk profile. This is
mitigated by the company's conservative reserving philosophy and the
ongoing, demonstrated support from its parent, Duke Energy (News - Alert) Corporation
(Duke Energy) [NYSE: DUK].
The risk management team of Duke Energy takes a holistic approach to
managing its risks and utilizes the captive as an integral part in this
process. Bison's long-term growth opportunities primarily depend on the
business success of Duke Energy.
Bisons ratings take into account its potential for future earnings
volatility. In A.M. Best's opinion, positive rating actions are
dependent upon Bison stabilizing its operating performance as well as
its risk-adjusted capitalization, materially exceeding A.M. Best's
expectations. Positive rating actions also could occur if the credit
profile of Duke Energy improves.
The potential for negative rating actions could result if the volatility
in Bison's operating performance exceeds A.M. Best's expectations and
results in a significant prolonged decline in its risk-adjusted
capitalization. In addition, deterioration in the credit profile of the
parent could impact Bison'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)"; "Rating New Company
Formations"; "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
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