BP captive, Jupiter Insurance, has had its outlook revised to stable from negative by AM Best.
The revised outlook is a result of an improvement in the position of BP, given the reduction in uncertainty regarding the Gulf of Mexico (GoM) oil spill in 2010.
The ratings agency said: “The ratings reflect Jupiter’s strong level of risk-adjusted capitalisation and good underwriting performance.”
“Offsetting these positive rating factors is Jupiter’s high level of risk retention and its concentrated investment portfolio,” said AM Best.
According to AM Best, Jupiter’s underwriting limit has increased significantly over recent years, with risk retention per event going from $500m in 2008 to $1.5bn on 1 April 2011.
This has been matched by a “noteworthy increase” in gross premium income, from $759m in 2008 to around $2bn in 2011.
Despite a concentrated investment portfolio, high underwriting limit and a lack of reinsurance protection, AM Best said that Jupiter is likely to maintain a strong level of risk-adjusted capitalisation over the medium term.