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Best’s News & Research Service - November 30, 2023 12:53 PM (EST)

AM Best Affirms Credit Ratings of Orion Reinsurance (Bermuda) Ltd.

  • November 30, 2023 12:53 PM (EST)
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Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Orion Reinsurance (Bermuda) Ltd. (Orion Re) (Hamilton, Bermuda). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Orion Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The ratings also reflect the company’s strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and the expertise of its management team. Partially offsetting these positive rating factors is the size of the company, which limits business diversification given the inherent concentration risk, and the sensitivity to changes in its balance sheet structure, and the composition of Orion Re’s business portfolio.

Orion Re was founded in December 2004 and is 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 2022, Colombia represented 58% of the company’s gross written premium, with the rest distributed in 10 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 size of the company. Premium sufficiency has yet to be achieved; however, the company has maintained profitable bottom-line results during most years, which are expected to improve as the company’s business expansion plan takes place. The results also are supported by income from the Rent-a-Captive business, which has presented a consistent flow over the past years.

As of September 2023, the company posted USD 1.4 million in net income, which is on the higher end compared with historical trends. Orion Re’s loss ratio stood at 16.5%, reflecting the management’s efforts to contain its claims.

Orion Re’s risk-adjusted capitalization, as measured by BCAR, has shown improvement since 2019, mainly due to a more conservative approach in the investment policies, which has reduced asset risk. However, due to the company’s size and operation, the scores are sensitive to changes in its balance sheet structure, and the composition of Orion Re’s business portfolio.

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. Although unlikely, positive rating actions could take place as a result of the strengthening of the company’s balance sheet, supported by a successful development of the business strategy.

The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Nov. 13, 2020), 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 .

Key insurance criteria reports utilized:

  • Evaluating Country Risk (Version May 4, 2023)

  • Understanding Global BCAR (Version July 6, 2023)

  • Available Capital & Holding Company Analysis (Version Oct. 13, 2017)

  • Scoring and Assessing Innovation (Version Feb. 27, 2023)

  • Catastrophe Analysis in AM Best Ratings (Version March 10, 2023)

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, relevant sources of information and the frequency for updating ratings, please refer to Guide to Best’s Credit Ratings.

  • Previous Rating Date: Nov. 17, 2022

  • Initial Rating Date: Nov. 3, 2020

  • Date Range of Financial Data Used: Dec. 31, 2016-Sept. 30, 2023

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

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.

If the ratings referred in this press release do not indicate a specific country suffix, it is understood that they are granted globally and not on a national scale.

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.

AM Best’s credit ratings are independent and objective opinions, not statements of fact. AM Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. AM Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. AM Best keeps certain activities of its business units separate from each other to preserve the independence and objectivity of their respective activities. As a result, certain business units of AM Best may have information that is not available to other AM Best business units. AM Best has established policies and procedures to maintain the confidentiality of certain confidential (non-public) information received in connection with each analytical process. For more information regarding AM Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. 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.

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