AM Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent) of Ørsted Insurance A/S (ORIAS).
ORIAS is the captive insurer for Denmark-headquartered Ørsted A/S (Ørsted), a global sustainable energy group.
The outlook of these credit ratings is stable.
AM Best says the ratings reflect ORIAS’ balance sheet strength, which it assesses as “very strong”, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
ORIAS’ very strong balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, This is the strongest assessment level, as measured by AM Best’s capital adequacy ratio.
The company also benefits from a very conservative investment portfolio. Offsetting factors in the assessment include the company’s high dependence on reinsurance, although the risks associated with this dependence are partly mitigated by ORIAS’ relationship with its highly-rated reinsurance panel.
The adequate operating performance assessment reflects ORIAS’ track record of ‘good but volatile underwriting results’, as demonstrated by a 10-year weighted average combined ratio of 81.3 per cent (2013-2022).
AM Best expects underwriting performance to improve in 2023, benefiting from higher premium income due to new construction projects underwritten by the captive, as well as insurance of a larger share of Ørsted’s operational renewables assets.
Prospective performance is subject to volatility due to the company’s exposure to potentially large property losses. Although it is moderated on a net basis by the captive’s comprehensive reinsurance programme.
As a captive monoline insurer providing commercial property and construction insurance covers for Ørsted, ORIAS’ underwriting portfolio is concentrated by line of business but well-diversified geographically.
