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FOR IMMEDIATE RELEASE
MEXICO CITY - SEPTEMBER 07, 2018 02:06 PM (EDT)
A.M. 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 A.M. Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The rating affirmations reflect the company’s strong risk-adjusted capital, geographic diversification, sound business strategy and good operating performance. 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, that is focused on reinsurance and offers a diversified product mix throughout Latin America and other strategically identified markets in other areas of the world. 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 has expanded since 2015 and now reaches into 24 countries throughout Latin America and eight other 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 positive operating performance, which, 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 profitable, showing an improvement in the expense ratio and overall bottom-line results.
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 company’s capital position.
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. 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.
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.
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