CONTACTS:
FOR IMMEDIATE RELEASE
MEXICO CITY - JULY 15, 2016 11:28 AM (EDT)
A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Ocean International Reinsurance Company Limited (Ocean Re) (Barbados). The outlook for each rating remains stable.
The affirmation of the ratings is based on the company’s strong risk-adjusted capital, geographic diversification, sound business strategy and good operating performance. Partially offsetting these positive rating factors are the susceptibility of its captive business to regulatory changes and the still-developing claims experience from its traditional reinsurance business.
Ocean Re is a Barbados-based reinsurer, licensed as a Qualifying Insurance Company focused on reinsurance and offers a diversified product mix in several countries throughout Latin America. The company also offers facultative programs that are fully funded to the expected ultimate losses by the company’s clients. Its business development strategy clearly identifies an increase in the proportion of traditional reinsurance in its portfolio, as compared to 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 expanded in 2015. The company now conducts business in 27 countries throughout Latin America, with 127 key clients.
The company’s risk-adjusted capitalization remains strong and has benefited from its positive operating performance. In addition, a capital contribution that is expected to take place in July 2016, along with a conservative dividend policy, continues to strengthen A.M. Best’s future view of the company’s development of capitalization and overall financial strength.
The operating performance of Ocean Re is good, with premium sufficiency derived from the nature of its captive business, as well as from an adequate retrocession program for its traditional reinsurance lines. Underwriting performance has remained on good levels despite an increase in claims in 2015 from one client, for which the company has made adjustments. As a result, the company expects to improve its underwriting results in 2016.
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 on its captive business or if traditional reinsurance underwriting shows poor operating performance to levels that affect the capital position of the company.
A.M. 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.
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:
View a general description of the policies and procedures used to determine credit ratings. Also in accordance with Mexican regulations, the following is a link to required disclosures – A.M. Best America Latina Supplementary Disclosure.
This press release relates to rating(s) that have been published on A.M. Best’s website. For additional 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 A.M. Best’s Recent Rating Activity web page.
A.M. Best’s credit ratings are independent and objective opinions, not statements of fact. A.M. Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. A.M. Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.
A.M. Best receives compensation for interactive rating services provided to organizations that it rates. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services. For more information regarding A.M. Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the A.M. Best Code of Conduct.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.