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AM Best Affirms Credit Ratings of Dorinco Reinsurance Company


AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” 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) remains stable.

The ratings reflect Dorinco’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, limited 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.

Dorinco’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR) is categorized as strongest. The balance sheet strength also considers the company’s track record of overall positive reserve development, conservative investment strategy, good liquidity profile and enhanced financial flexibility provided by its ultimate parent, Dow.

Dorinco has historically generated strong operating earnings, resulting in performance metrics that have consistently outperformed its composite group. In 2018, the company reported a net profit of USD 48.6 million (2017: USD 112.1 million) and a return on equity of 8.2% (2017: 20.2%), with results being underpinned by sound underwriting profits and investment results in line with the market. As the company limits its exposure to catastrophe risks, both 2017 and 2018 results were not significantly impacted by natural catastrophes.

Dorinco issues direct property and liability insurance policies to Dow and certain related companies, and participates in property and casualty reinsurance treaties covering Dow or related parties with other insurance companies. The company also writes a book of uncorrelated third-party business, which is largely represented by non-standard auto, short-tailed risks. This strategy serves to reduce the potential volatility of the Dow-related business and has proven successful for a number of years.

As a single-parent captive, Dorinco is well-integrated within the Dow group and plays a fundamental role in managing the group’s risk exposures. The company’s risk management capabilities are in line with its risk profile.

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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

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