AM Best confirms the rating of Dorinco Re

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AM Best has affirmed the financial strength rating of A and the long-term issuer credit rating of “a” for Dorinco Reinsurance Company, the captive reinsurance company of The Dow Chemical Company (Dow).

The outlook for these credit ratings is stable.

According to AM Best, the ratings reflect the strength of Dorinco’s balance sheet, which the rating agency assesses as very strong, as well as its adequate operational performance, its neutral commercial profile and its appropriate management of business risks. Dorinco is a wholly owned subsidiary of Liana, which is ultimately a wholly owned subsidiary of Dow.

Dorinco’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is rated at the highest level. The strength of the balance sheet also takes into account the company’s track record of positive overall reserve development, a conservative investment strategy, a good liquidity profile and the increased financial flexibility offered by its ultimate parent company, Dow.

The ratings also recognize Dorinco’s operational performance, which AM Best assesses as adequate. Dorinco has a long history of favorable operating performance, although its overall metrics have moved in an unfavorable direction in recent years. This is partly due to redundant reserves, which can produce lower accident year combined ratios when claims are ultimately settled.

In addition, the ratings recognize Dorinco’s business profile, which AM Best considers neutral. Dorinco issues direct property and liability insurance policies to Dow and certain related companies, and participates in property and casualty reinsurance treaties covering Dow and related parties with other insurance companies. About half of Dorinco’s premium comes from the reinsurance of uncorrelated non-standard automotive third-party business. The resulting diversification enhances Dorinco’s business profile.

Dorinco is a well-integrated single-parent captive within the Dow group and plays a fundamental role in the group’s risk management. The company’s risk management capabilities are consistent with its risk profile, AM Best said.

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