AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent) of Bermudian-based Transmonde Services Insurance Company Ltd.

The outlook of these credit ratings is stable.

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

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

AM Best said additional offsetting factors include the limited market profile as a single-parent captive that derives all its business from its parent company, SGS SA, a publicly traded Swiss company.

Transmonde provides professional, property, cyber, general and pollution liability coverages to subsidiaries of SGS.

The agency 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.

Transmonde has a history of conservatively distributing excess capital back to SGS.

AM Best said the company has posted low loss and loss adjustment ratios, which reflect SGS’s robust and effective risk management.

Its relatively high per-occurrence retentions are mitigated by significant deductibles and conservative reserving practices.