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FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 11, 2020 09:12 AM (EST)
AM Best has assigned a Financial Strength Rating (FSR) of A- (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” to Obsidian Specialty Insurance Company (Obsidian Specialty) (Wilmington, DE). The outlook assigned to these Credit Ratings (ratings) is stable. Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of Obsidian Insurance Company (Obsidian) (Columbus, OH). The outlook of these ratings is stable. Obsidian Specialty and Obsidian are collectively referred to Obsidian Insurance Group.
The ratings reflect Obsidian Insurance Group’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 (ERM).
The very strong balance sheet assessment is based on the initial financing structure that provides supportive risk-adjusted capital through the initial start-up period. The group members will share risk through an inter-company pooling agreement. Obsidian Insurance Group provides fronting services for a diverse mix of managing general agents while retaining a strategic portion of selected programs. By nature of the business model and the substantial amount of ceded premiums, the companies will be 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. Additionally, the group is entering an increasingly competitive market for providers of fronting services. AM Best recognizes the group’s planned implementation of measures to mitigate contractual, credit and underwriting risk as part of its ERM structure.
Negative rating actions could occur if risk-adjusted capital is short of needs, actual operating results fall adversely outside the initial projections, or risk appetite and tolerance levels prove to be inadequate for the group’s profile.
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.