OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of “a+” of the members of Odyssey Reinsurance Group (Odyssey Re). Concurrently, A.M. Best has affirmed the ICR of “bbb” and the debt ratings of Odyssey Re Holdings Corp. (Wilmington, DE). The outlook for these ratings is stable. (See below for a detailed listing of the companies and ratings.)
The ratings reflect Odyssey Re’s excellent risk-adjusted capitalization, strong financial performance and solid business position. The company also benefits from the flexibility derived from having reinsurance and insurance operations and the ability to shift from one platform to the other as the market changes. Odyssey Re is a global underwriter of reinsurance and specialty primary insurance products and ranks among the top 15 global reinsurance groups in terms of premium volume. Odyssey Re’s competitive position benefits from its worldwide market presence with regard to business mix and geographic reach. These positive attributes are further supported by Odyssey Re’s diversified geographic client base, combined with its large line capacity, broad product capability and its opportunistic business strategy. Odyssey Re’s investment management philosophy, which emphasizes a total return strategy, has augmented the group’s earnings.
The ratings also recognize Odyssey Re’s strong liquidity and the benefit derived from access to its ultimate parent company, Fairfax Financial Holdings Limited, and Fairfax’s access to public markets.
Somewhat offsetting these strengths are the challenging underwriting and investment environments and the group's historical reliance on realized and unrealized capital gains to bolster its overall financial performance. A.M. Best views this source of earnings as more variable and less predictable than earnings sourced from underwriting.
Odyssey Re maintains a manageable exposure to natural catastrophes as measured by its 1-in-250-year probable maximum loss estimates relative to statutory surplus. In A.M. Best’s opinion, Odyssey Re has developed an excellent and holistic enterprise risk management framework.
Positive rating actions could occur if the group maintains consistently strong underwriting performance and long-term profitability. However, the ratings and outlook may come under negative rating pressure if Odyssey Re were to experience outsized catastrophe or investment losses relative to its peer group.
The FSR of A (Excellent) and the ICRs of “a+” have been affirmed for the following members of the Odyssey Reinsurance Group:
- Odyssey Reinsurance Company
- Hudson Insurance Company
- Hudson Specialty Insurance Company
- Hudson Excess Insurance Company
Newline Insurance Company Limited
The following debt rating has been affirmed:
Odyssey Re Holdings Corp.—
-- “bbb” on $125 million 6.875% senior unsecured notes, due 2015
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Catastrophe Analysis in A.M. Best Ratings
- Insurance Holding Company and Debt Ratings
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding BCAR for Property/Casualty Insurers
- Understanding Universal BCAR
This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best’s Ratings & Criteria Center.
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