A.M. Best has assigned a financial strength rating of A (Excellent) and a long-term issuer credit rating of “a” to Oxford Insurance Company LLC (Wilmington, DE).
The rating company has also assigned the ratings to its affiliates Oxford Insurance Company NC LLC (Wilmington, DE), Oxford Insurance Company TN LLC (Nashville, TN), and First Community Bankers Insurance Company, LLC (Nashville, TN).
These companies are collectively known as Oxford Insurance Companies (Oxford). The outlook assigned to these credit ratings is stable.
A.M. Best stated that the ratings reflect Oxford’s balance sheet strength, which they categorised as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The stable outlooks reflect A.M. Best's expectations that the companies will continue to generate strong operating performance and maintain very strong capitalisation.
The companies’ balance sheet strength is very strong, as management uses several metrics to ensure the solvency of all captive cells at all times, including growth and underwriting leverage, while collateralising premiums and losses and utilising extensive risk controls.
Oxford was initially formed in Delaware in 2010 as a special purpose captive company, however, it now operates under a pooling arrangement that enables all active cells to retain 20 percent of their own written premium with any claims submitted to the unified pool.
The remaining 80 percent of the written premium is shared pro-rata across a very large base of insureds of similar size, avoiding concentrations and dependence on any single cell.
According to A.M. Best, loss ratios across the various cells are very low, effectively covering a hard-to-write and unique coverage for low frequency/high severity risks, with risk-sharing among the cells.
Oxford serves the specific insurance needs (gap coverage) of small to medium, privately held enterprises and high net worth clients that do not have significant large programme needs.
A.M. Best noted that the structure enables the insured to address their insurance needs in a premium and loss-sharing pooling arrangement for low frequency, high severity events, which are unique to their respective enterprises and are largely uncorrelated.
Oxford currently has approximately 700 active cells that provide 70 discrete coverages.
The enterprise risk management practices are appropriate with strong operating controls and procedures in place to continually establish new cell structures and manage a platform with intensive surveillance and monitoring to protect the integrity of the pool for all policyholders.