AM Best has affirmed the financial strength rating of ‘A’ (excellent) and the long-term issuer credit rating of ‘a’ (excellent) of Michigan-domiciled Dorinco Reinsurance Company (Dorinco). The outlook of these Credit Ratings (ratings) is stable.
Dorinco is the single-parent reinsurance captive for the Dow Chemical Company. The captive is a wholly owned subsidiary of Liana Limited, which is ultimately a wholly owned subsidiary of Dow.
Dorinco issues direct property and liability cover to Dow and certain related companies, and participates in property and casualty reinsurance treaties covering Dow and related parties with other insurance companies.
Around half of Dorinco’s premium is derived from reinsuring uncorrelated non-standard auto third-party business, with this diversification enhancing Dorinco’s business profile.
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.
The “very strong” balance sheet strength assessment is supported by Dorinco’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which AM Best said remains at the strongest level.
Dorinco has a record of positive reserve development, conservative investment strategy, and good liquidity, which are enhanced by its parent company.
The ratings also reflect Dorinco’s operating performance, which AM Best assess as adequate.
The company’s historically favourable operating performance improved during 2022, although its profitability metrics have trended in an unfavourable direction in recent years.
The fluctuations 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.