OLDWICK, New Jersey – (COMMERCIAL THREAD) –AM Best confirmed the financial strength rating of A (excellent) and long term issuer credit rating of “a” (excellent) of Dorinco Reinsurance Company (Dorinco) (Midland, MI), which is the captive reinsurance company by The Dow Chemical Company (Dow). The outlook for these credit ratings (ratings) is stable.
The ratings reflect the strength of Dorinco’s balance sheet, which AM Best considers to be very strong, as well as its strong operational performance, limited business profile and appropriate management of business risks. 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 valued at the highest level. The strength of the balance sheet also takes into account the company’s track record of developing overall positive reserves, a prudent investment strategy, a good liquidity profile and the increased financial flexibility offered by its ultimate parent company, Dow.
Dorinco has historically generated strong operating profits, resulting in performance metrics that have consistently outperformed its composite group. In 2020, the company reported net income of $ 72.6 million (2019: $ 47.2 million) and a return on equity ratio of 11.5% (2019: 7.1%). Recent overall operating performance has been boosted by the contribution of investments, as underwriting losses have arisen in recent years.
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 an uncorrelated third-party business book that largely consists of non-standard automobiles, which involves short-lived risks. This strategy serves to reduce the potential volatility of Dow-related businesses and has been proven to work for several years.
As a single parent captive, Dorinco is well integrated within the Dow group and plays a fundamental role in the management of the group’s risk exposures. The company’s risk management capabilities are consistent with its risk profile.
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