AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” of Blue Whale Re Ltd. (Blue Whale) (Burlington, VT). The outlook of these Credit Ratings (ratings) remains stable.

The ratings reflect Blue Whale’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The ratings also reflect Blue Whale’s strategic position as the captive insurer for Pfizer Inc. (Pfizer) [NYSE: PFE], a leading global pharmaceutical company. As Blue Whale insures or reinsures Pfizer’s global property exposures, it plays an important role in Pfizer’s overall ERM and assumes a critical role in protecting the Pfizer enterprise’s assets.

Blue Whale’s capitalization is very strong, albeit reliant on its parent. It operates at conservative underwriting leverage levels; however, it provides coverages with extremely large limits, and its gross exposures per loss occurrence are elevated. Although Blue Whale benefits from reinsurance protection, it is heavily dependent on reinsurance, with very substantial net retentions. Its reinsurance is provided by a large panel of reinsurers that provide significant capacity. AM Best recognizes the quality of the reinsurers, and the substantial financial resources and support available to the captive as part of the Pfizer group.

Due to the nature of the relationship between Blue Whale and Pfizer, changes in Pfizer’s credit risk can impact Blue Whale’s ratings, as it is dependent on Pfizer’s ability to support its credit risk profile, competitiveness and risk management. AM Best’s view of third-party credit ratings and Pfizer’s market-based credit risk measures indicate general strength, despite short-term uncertainty as Pfizer refocuses its strategy toward newer pharmaceuticals, divests its over-the-counter pharmaceutical business and contributes its mature pharmaceuticals going off patent to a joint venture. That said, the captive continues to be an integral component of Pfizer’s risk management platform.

Blue Whale’s operating results and reserve levels reverted to historical levels in 2019, following final resolution of Hurricane Maria-related claims. Prospectively, the company anticipates lower property insurance requirements through 2020 as the parent evaluates its Caribbean production and warehouse insurance requirements. Based on the parent’s refocused corporate strategy described above, as well as Blue Whale’s current reinsurance program, Blue Whale appears well-positioned to address Pfizer’s insurance needs.

AM 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 risk transfer insurance market, please visit www.ambest.com/captive.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s

Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Dan Teclaw Senior Financial Analyst +1 908 439 2200, ext. 5394 dan.teclaw@ambest.com Christopher Sharkey Manager, Public Relations +1 908 439 2200, ext. 5159 christopher.sharkey@ambest.com Susan Molineux Director +1 908 439 2200, ext. 5829 susan.molineux@ambest.com

Jim Peavy Director, Public Relations +1 908 439 2200, ext. 5644 james.peavy@ambest.com

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