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FOR IMMEDIATE RELEASE
OLDWICK - MARCH 26, 2020 03:20 PM (EDT)
AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to Obsidian Insurance Company (Obsidian) (Columbus, OH). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Obsidian’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The very strong balance sheet assessment is based on the initial financing structure that provides supportive risk-adjusted capital across the initial start-up period. The company intends to provide fronting services for a diverse mix of managing general agents (MGAs) while retaining a strategic portion of selected programs. By nature of the business model and the substantial amount of ceded premiums, the company is subject to significant counterparty credit risk. This is compounded by general risk exposures that commonly impact start-up entities such as key operational and execution risks. Recognition is given to management’s planned implementation of measures to mitigate contractual, credit and underwriting risk.
Additional consideration was given to management’s projected business profile, operating structure, the availability of additional capital and a competitive market for providers of fronting services.
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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.