AM Best lowers Jupiter to A from A+ following Standard & Poor's downgrade to AA-
As the Deepwater Horizon rig continues to leak oil into the Gulf of Mexico, rating agency AM Best has cut the financial strength rating of Jupiter Insurance, the captive insurer of Deepwater owner BP, to A from A+. The outlook for the rating remains negative.
AM Best said the downgrade and negative outlook on Jupiter reflect concerns about the continuing oil spill’s effect on BP. Although BP has set up a $20bn (£13.48bn) claims fund, it is impossible to assess the impact of the incident on BP in terms of financial liabilities and reputational damage. The agency added that uncertainties would remain for some time.
Despite the downgrade, AM Best believes the financial position of Jupiter will remain strong. Though the captive has established loss reserves at its policy limit of $700m, risk-adjusted capital still supports the rating level, it said.
AM Best is the second agency to downgrade the captive. Two weeks ago, Standard & Poor’s lowered Jupiter’s rating to AA- from AA and placed the rating on credit watch with negative implications.