AM Best assigns credit ratings to Ørsted Insurance A / S
AMSTERDAM – (COMMERCIAL THREAD) –AM Best assigned Ørsted Insurance A / S (ORIAS) (Denmark) a financial strength rating of A- (excellent) and a long-term issuer credit rating of “a-” (excellent). The outlook assigned to these credit ratings (ratings) is stable.
The ratings reflect the strength of ORIAS ‘balance sheet, which AM Best considers very strong, as well as its adequate operational performance, neutral business profile and appropriate enterprise risk management (ERM).
ORIAS is the captive insurer of commercial property of Ørsted A / S (Ørsted), a global sustainable energy group headquartered in Denmark.
ORIAS’s very strong assessment of balance sheet strength is underpinned by its risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR), which is significantly above the highest level. The company also benefits from a very conservative and liquid investment portfolio. Compensating factors in the assessment include the firm’s heavy reliance on reinsurance, although the risks associated with this reliance are partly mitigated by ORIAS’s long-standing relationship with its panel. reinsurance, which is highly rated.
The proper assessment of operating performance reflects the Company’s track record of good but volatile underwriting results. The captive has reported underwriting profits, net of reinsurance, for four of the past five years, benefiting from a low frequency of claims. In 2020, ORIAS recorded a net loss of DKK 28.8 million (2019: DKK 14.7 million profit). The loss was caused by prudent provisions for three large claims, which have since been adjusted significantly downward. Forward-looking performance is subject to volatility due to the company’s potential exposure to significant property losses, but underwriting volatility is moderated on a net basis by the captive’s full reinsurance program.
As a captive monoline insurer providing business property insurance coverage to Ørsted, ORIAS ‘underwriting portfolio is concentrated in business property insurance but is well diversified geographically. The neutral assessment of ORIAS’s corporate profile also reflects its strategic importance for Ørsted.
AM Best remains the main rating agency for alternative risk transfer entities, with more than 200 such vehicles rated worldwide. For Best’s current credit ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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