Rent a captive company's rating affirmed
Bermuda-based Orion Reinsurance has had its B+ financial strength rating affirmed by AM Best, which said the insurer’s strong capitalisation was offset by the small size of the company. The outlook is stable.
AM Best said Orion Re was founded as a Class 3 insurer in 2004 and primarily offers difference in conditions insurance to businesses in Latin America and the Caribbean.
It also retains specific life and non-life insurance business and is recognised in the public service industry. Part of its business is offering rent a captives.
As of December 2023, Mexico represented 44% of the company’s gross written premium, with the rest distributed in 13 other countries, primarily throughout Latin America and the Caribbean.
“Premium sufficiency was achieved in 2023, and Orion Re has maintained profitable bottom-line results during most years,” AM Best said. “Results are expected to improve as the business expansion plan takes place, supported by income from the Rent-a-Captive business, which has presented a consistent flow over the past years.
“As of June 2024, the company posted $121,795 in net income, and the loss ratio stood at 36%, reflecting the management’s efforts to contain its claims.”
AM Best said 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,” it said.
“Positive rating actions could take place with consistent strengthening of the company's balance sheet, supported by a successful development of the business strategy. Negative rating actions could occur if premium growth, changes in the asset structure and/or underwriting risk profile or deteriorating operating results reduce risk
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