Best’s News & Research Service - November 03, 2020 01:39 PM (EST)
AM Best Assigns Credit Ratings to Orion Reinsurance (Bermuda) Ltd.
- November 03, 2020 01:39 PM (EST)
Mexico City //BestWire// - AM Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” to Orion Reinsurance (Bermuda) Ltd. (Orion Re) (Hamilton, Bermuda). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Orion Re’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The ratings also reflect the company’s very strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as the expertise of its management team. Partially offsetting these positive rating factors is the small size of the company, which limits business diversification given the inherent concentration risk.
Orion Re was founded in December 2004, and licensed by the Bermuda Monetary Authority to act as a class III insurer without restrictions of any kind in its class. Orion Re’s main line of business is difference in conditions insurance, but the company also retains specific life and non-life insurance business. Orion Re has experience and recognition in the public services industry, as well as strategic alliances to support recognized Latin American reinsurers.
As of December 2019, the company’s gross written premiums were concentrated in South America, with the rest in 14 other countries, primarily throughout Latin America and the Caribbean.
Orion Re’s growth has fluctuated over the past five years, which is consistent with the small size of the company. Premium sufficiency has yet to be achieved; however, the company has maintained marginally profitable bottom-line results, which are expected to improve as the company’s business expands.
Risk-adjusted capitalization, as measured by BCAR, has shown improvement in 2019, mainly as a result of a more conservative approach in the investment policies, which reduced asset risk. However, due to the company’s size and operation, the scores are sensitive to changes in the balance sheet structure, as well as Orion Re’s premium volume.
Positive rating actions could occur if the Orion Re’s risk-adjusted capitalization strengthens further as a result of sustained improvement in its bottom-line results. Negative rating actions could occur if premium growth, changes in the investment and/or underwriting risk profile, or deteriorating operating results, reduce risk-adjusted capitalization to a level that no longer supports the ratings.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of AM 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:
- Understanding Universal BCAR (Version June 11, 2020)
- Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
- Scoring and Assessing Innovation (Version March 5, 2020)
- Evaluating Country Risk (Version Oct. 13, 2017)
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 Guide to Best’s Credit Ratings.
- Previous Rating Date: Not Rated
- Date Range of Financial Data Used: Dec. 31, 2013-Dec. 31, 2019
This press release relates to rating(s) that have been published on AM 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 AM Best’s Recent Rating Activity web page.
AM Best does not validate or certify the information provided by the client in order to issue a credit rating.
While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. AM Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.
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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.