MEXICO CITY--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Ocean International Reinsurance Company Limited (Ocean Re) (Barbados). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Ocean Re’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The stable outlook and rating affirmations reflect the consistently positive bottom line results the company has been able to generate through its underwriting while still protecting its capital base. Partially offsetting these positive rating factors is the susceptibility of its captive business to regulatory changes.
Ocean Re is a Barbados-based reinsurer, licensed as a qualifying insurance company, which is focused on reinsurance and offers a diversified product mix throughout Latin America and other strategically identified geographic markets. The company also offers facultative programs that are fully funded to the projected ultimate losses of the company’s clients. Its business development strategy clearly identifies an increase in the proportion of traditional reinsurance in its portfolio, as compared with its captive portfolio; however, regulatory changes remain a factor when evaluating the continuity of its fully funded programs, as legislative adjustments could potentially limit its premium growth.
Ocean Re’s regional geographic footprint continues to expand, reaching into 24 countries throughout Latin America and eight countries outside this region. Ocean Re foresees significant growth potential in Panama, Colombia and Mexico, as well as Guatemala, Ecuador, Paraguay and Peru, which offer potential to diversify the portfolio.
The company’s risk-adjusted capitalization remains strong, and has benefited from its adequate operating performance, which, along with a conservative dividend policy, continues to strengthen AM Best’s future view of the company’s development of capitalization and overall financial strength.
Ocean Re’s operating performance in 2019 has resulted in consistent positive net income, due to good levels of premium sufficiency derived from the nature of its captive business, as well as from an adequate retrocession program for its expanding traditional reinsurance lines. Underwriting performance continues to drive the company’s strategy, either through a larger risk taking or through improved underwriting standards for new captive business.
Positive rating actions may take place if the company is able to maintain a healthy traditional reinsurance portfolio and further diversify its revenue sources while sustaining a sound retrocession program and current risk-adjusted capitalization metrics. Negative rating actions could take place if there are significant business disruptions in its captive business or if traditional reinsurance underwriting shows poor operating performance to levels that affect the capital position of the company.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of AM 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:
- Alternative Risk Transfer (ART) (Version Oct. 13, 2017)
- Evaluating Country Risk (Version Oct. 13, 2017)
- Understanding Universal BCAR (Version May 23, 2019)
- Catastrophe Analysis in AM Best Ratings (Version Oct. 13, 2017)
- Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to Understanding Best’s Credit Ratings.
- Previous Rating Date: September 7, 2018.
- Date Range of Financial Data Used: 30 November 2012-August 31, 2018
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