AM Best has affirmed the financial strength rating of the long-term Bermuda captive of the International Association of Superintendents, a subsidiary of the Swiss organisation SGS SA.

A Bermuda captive since 1978, Transmonde Services Insurance Company Limited writes liability coverages for members of the association.

SGS SA is a Swiss multinational company headquartered in Geneva, which provides inspection, verification, testing and certification services.

Forbes ranked SGS SA as a top multinational performer and “one of the world’s most innovative companies” in 2017.

AM Best has affirmed Transmonde’s financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent). The ratings outlook is stable.

AM Best said that the ratings reflect Transmonde’s balance sheet strength, which the agency assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

Partially offsetting these rating factors are Transmonde’s high retentions and concentration in liability lines with significant loss severity potential, although the company has experienced historically favourable loss experience.

Additional offsetting factors include the limited market profile as a single-parent captive that derives all of its business from its parent company.

Transmonde provides professional, general and pollution liability coverages to members of the International Association of Superintendents, which are subsidiaries of the publicly traded SGS SA.

AM Best said: “Transmonde has maintained very conservative underwriting leverage ratios, as surplus has remained strong to support its business volumes.

“Historically, surplus growth is the result of retained earnings from highly profitable operating results driven by excellent underwriting performance.

“The company has posted low loss and loss adjustment ratios, which reflect SGS’s effective risk management. Its relatively high per-occurrence retentions are mitigated by significant deductibles and conservative reserving practices.

“While the rating outlooks are stable, factors that could lead to negative rating action include a material deterioration of risk-adjusted capitalisation, decreased strategic importance to the group’s enterprise risk management, deterioration in operating performance or high dividend demands from the parent company depleting capital.”