AM Best Information Services

AUGUST 24, 2017 10:08 AM (EDT)

A.M. Best Affirms Credit Ratings of Oil Casualty Insurance, Ltd

 Guilherme (Guy) Monteiro Simoes
Senior Financial Analyst
+1 908 439 2200, ext. 5301

Susan Molineux
Senior Financial Analyst
+1 908 439 2200, ext. 5829

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


OLDWICK - AUGUST 24, 2017 10:08 AM (EDT)
A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Oil Casualty Insurance, Ltd (OCIL) (Hamilton, Bermuda). A.M. Best also has affirmed the Long-Term Issue Credit Rating of “bbb” to the $200 million 8.00% deferrable subordinated debentures due Sept. 15, 2034, issued by OCIL in 2004 and amended in 2015. The outlook of these Credit Ratings (ratings) remains stable.

The ratings reflect OCIL’s strong risk-adjusted capitalization, generally solid operating profitability and diversified asset portfolio. The ratings also acknowledge the many strengths of the company’s niche market focus as a dedicated provider of excess general liability coverage to its shareholders and non-shareholder policyholders that operate primarily in the energy industry. OCIL has diversified its business in recent years through assumed reinsurance treaties, and has expanded into direct and facultative property coverage within the energy sector, resulting in a reduction of overall volatility of the company’s book of business. The company, in recent years, has expanded its insurance and reinsurance operations to provide property/casualty insurance to global companies outside the energy industry.

Partially offsetting these positive rating factors is the impact on underwriting results from occasional outsized shock losses, last experienced in 2010 with losses caused by the Gulf of Mexico Deepwater Horizon accident and a large oil spill in Michigan. The impact of these outsized losses is mitigated somewhat by retrocessional reinsurance cover purchased by the company. In addition, the company’s capital base is exposed to volatility from its equity portfolio and hedge fund investments.

OCIL’s enterprise risk management program has proven effective at mitigating losses over the past several years. Its management team is very seasoned, with members having a number of years of experience in the insurance, financial or energy industry, with a demonstrated track record of successfully implementing strategic initiatives.

A key rating factor that could lead to a positive rating action is a continued trend of favorable underwriting results with a reduction in the volatility of the underwriting results.

A negative rating action could result from a material decline in the company’s risk-adjusted capitalization.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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AMB# Company Name
086605 Oil Casualty Insurance, Ltd