Dorinco ratings confirmed by AM Best
AM Best has affirmed the financial strength rating of A and the long-term issuer credit rating of “a” of Dorinco Reinsurance Company, which is the captive reinsurance company of The Dow Chemical Company.
The outlook of the credit ratings is stable.
The ratings reflect Dorinco’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. Dorinco is a wholly owned subsidiary of Liana, which is ultimately a wholly owned subsidiary of Dow.
The very strong balance sheet strength assessment is supported by Dorinco’s risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, which remains at the strongest level. Dorinco has exhibited a track record of overall positive reserve development, conservative investment strategy, and good liquidity profile, which are enhanced by its ultimate parent, Dow Inc., which provides financial flexibility.
The ratings also reflect Dorinco’s operating performance, which AM Best assess as adequate. The company’s historically favourable operating performance improved during 2022, said AM Best, although its profitability metrics have trended in an unfavourable direction in recent years. The fluctuations in Dorinco’s metrics are mostly due to redundant reserving, which may produce lower accident year combined ratios when the claims are ultimately settled.
Additionally, the ratings acknowledge Dorinco’s business profile, which AM Best assesses as neutral. Dorinco issues direct property and liability insurance policies to Dow and certain related companies, and it participates in property and casualty reinsurance treaties covering Dow and related parties with other insurance companies. Approximately half of Dorinco’s premium is derived from reinsuring uncorrelated non-standard auto third-party business. The diversification this provides enhances Dorinco’s business profile.
Dorinco is a single-parent captive that is well-integrated within the Dow group and plays a fundamental role in managing the group’s risk-exposures. The company’s risk management capabilities are in line with its risk profile.