Press Release - SEPTEMBER 08, 2017
A.M. Best Affirms Credit Ratings of Ocean International Reinsurance Company Limited
FOR IMMEDIATE RELEASE
MEXICO CITY - SEPTEMBER 08, 2017
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 is the susceptibility of its captive business to regulatory changes.
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 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 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 has expanded since 2015. The company now conducts business in 24 countries throughout Latin America. Ocean Re foresees significant growth potential in Panama, Colombia and Mexico, as well as other countries such as Guatemala, Nicaragua, 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. In addition, a capital contribution took place in August 2016, 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 maintained profitability, but was affected by a bad experience in one account, for which the company has made adjustments, and had a better experience with 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.
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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