AM Best Revises Outlooks to Positive, Affirms Credit Ratings of Ocean International Reinsurance Company Limited

AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long Term ICR) of “a-” (Excellent) of Ocean International Reinsurance Company Limited (Ocean Re) (Barbados).

The Credit Ratings (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 (ERM).

The positive outlooks recognize the disciplined underwriting by the company to deploy its capital with profitable results. Operating performance metrics continue showing a positive trend, in conjunction with growth targets based on diversified geographical exposures, potential new businesses and successful growth of the risk-bearing portfolio.

Ocean Re is a Barbados-based reinsurer, licensed as a Class 2 insurance company, which offers a diversified product mix worldwide with a relevant presence in Latin America. Ocean Re also offers facultative reinsurance programs, which are fully funded to the projected ultimate losses of the company’s clients. Ocean Re’s 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 has continued to expand, having presence in 114 countries as of December 2022, being able to further diversify its risks insured throughout Latin America, Asia, the Middle East and North Africa, among other regions. To further improve its underwriting, the company has acquired some of its business partners’ operations (including personnel), gaining expertise and exclusivity over those channels, regions and markets.

Ocean Re’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 Sept. 30, 2023. In addition, the broader geographic diversification could reflect an improvement in the required capital over the medium term; however, AM Best will continue to monitor the influence of the holding company on Ocean Re’s balance sheet strength, due to its financial leverage and evolving corporate structure.

Ocean Re’s operating performance in 2022, and up to September 2023, resulted in positive net income, due to good levels of premium sufficiency derived from the performance of its expanding traditional reinsurance lines, as well as from the nature of its captive business. Up to September 2023, results had almost reached those of year-end 2022, pointing to a consolidation of the underwriting strategy in some markets, while others are still being developed, with appropriate ERM policies and procedures to mitigate any upcoming risk.

Positive rating actions could take place as a result of the successful evolution of Ocean Re's diversification strategy, in line with the positive trend in operating performance metrics. Negative rating actions could occur from material changes to risk-adjusted capitalization either as a result of losses or implementation risk of the business strategy. Also, negative rating actions could occur if there is an increase in the financial leverage of the holding company putting pressure on the balance sheet strength of Ocean Re.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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