AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Dorinco Reinsurance Company (Dorinco) (Midland, MI), which is the captive reinsurance company of The Dow Chemical Company (Dow). The outlook of these Credit Ratings (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 Limited, which is ultimately a wholly owned subsidiary of Dow.
The very strong balance sheet strength assessment is supported by Dorinco’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which remains at the strongest level. Dorinco has demonstrated historically favorable reserve levels, a conservative investment strategy and favorable liquidity measures that are enhanced by its ultimate parent, Dow, which provides financial flexibility. Dorinco is expected to remain unaffected by its parent’s increased leverage and reduced interest coverage. Nonetheless, Dow Inc. recently began to show meaningful improvement on its margins.
The ratings also reflect Dorinco’s operating performance, which AM Best assesses as adequate. The company has a long track record of favorable operating performance. Dorinco compares favorably with the industry in terms of combined ratio, operating ratio and return on equity on a five- and 10-year basis.
Additionally, the ratings reflect 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/casualty reinsurance treaties covering Dow and related parties with other insurance companies. Approximately 68% of Dorinco’s premium is derived from reinsuring uncorrelated non-standard auto third-party business. The diversification that this provides enhances Dorinco’s business profile.
Dorinco’s risk management capabilities are aligned with its risk 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.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. 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. For more information, visit www.ambest.com.
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