MEXICO CITY--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Ocean International Reinsurance Company Limited (Ocean Re) (Barbados). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Ocean Re’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The stable outlooks recognize the disciplined underwriting by the company to deploy its capital with profitable results amid an unfavorable business cycle.
Ocean Re is a Barbados-based reinsurer, licensed as a Class 2 insurance company, which offers a diversified product mix worldwide with a major presence in Latin America. The company also offers facultative reinsurance 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.
Ocean Re’s regional geographic footprint continues to expand, reaching into 111 countries throughout Latin America and other countries beyond the region. Ocean Re foresees significant growth potential in key markets and regions like the Middle East and North Africa, the Inter-African Conference on Insurance Markets (CIMA) and the Far East, which would continue to diversify the portfolio.
The company’s risk-adjusted capitalization remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR) and has benefited from a capital contribution received in early 2020 and profitable results up to June 30, 2021. AM Best will continue to monitor Ocean Re’s balance sheet strength, particularly given the influence that its holding company exerts on it due to its financial leverage and evolving corporate structure.
Ocean Re’s operating performance in 2020 and 2021 resulted in 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. So far, 2021 is proving to be a consolidating year with the company presenting good results in new markets and successfully expanding its distribution channels.
Negative rating actions could occur from material changes to risk-adjusted capitalization as a result of significant losses or if Ocean Re fails to implement its business strategy successfully. Negative rating actions could also take place if there is an increase in the financial leverage of the holding company that puts pressure on the balance sheet strength of Ocean Re. Positive rating actions are not foreseen in the medium term.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated 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.
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