AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of a- (Excellent) of Oil Casualty Insurance, Ltd.

AM Best also has affirmed the Long-Term Issue Credit Rating of bbb (Good) on the $200 million, 8 per cent deferrable subordinated debentures, due on September 15, 2034. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect OCIL’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).

OCIL maintains risk-adjusted capital, as measured by Best's Capital Adequacy Ratio, in the strongest range.

Capitalisation has supported the company’s significant premium growth over the past few years as the company has been executing strategic diversification efforts as well as capitalising on rate hardening in its market.

The company’s diversification efforts have supplemented its primary mission as a stable capacity provider for the energy industry.

Underwriting performance has been volatile over the past sfive years, with the company experiencing some occasional shock losses. However, the company does use retrocessional reinsurance and limit management cover to mitigate its exposure.

Investment returns have been accretive to the company’s results in four of the past five years.

The management team is seasoned, with its members having a number of years of experience in the insurance, financial and energy industries. The team also possesses a demonstrated track record of successfully implementing strategic initiatives.

Positive rating movement is not anticipated over the short term; diversification and growth initiatives will need to prove beneficial to the group's operating performance over the intermediate term.

Negative rating actions could result from a material reduction in OCIL’s risk-adjusted capitalization, AM Best concluded.