OREANDA-NEWS. A.M. 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.

Dorinco continues to deliver strong combined ratios, positive net income, strong risk-adjusted capitalization while maintaining a conservative investment portfolio and a prudent approach to underwriting. Its risk profile remains diversified through its short-tail uncorrelated third-party reinsurance business and the longer-tail exposure associated with its Dow business.

Dorinco’s strategy is to maintain a diversified book of business with a focus on stable financial performance, profitability and low volatility. It has developed a solid third-party business while continuing to be Dow’s conduit to the insurance market.

Positive rating factors include continued parental support, strong results and prudent risk selection, particularly on third-party business, as well as a conservative investment portfolio and strong risk-adjusted surplus.

Partially offsetting these positive rating factors is the limited profile in the reinsurance market, which is a function of its hybrid captive nature. Another offsetting factor is the exposure to Dow risks, many of which are long-tailed, natural catastrophe-exposed and worldwide.

A.M. Best believes that Dorinco is well-positioned at its current rating level. Key drivers that could lead to a rating downgrade are unfavorable operating profitability trends, significant premium growth given the current challenging market environment, significant catastrophe or investment losses, a significant decline in risk-adjusted capitalization or loss of parental support. Factors that could lead to a rating upgrade include continued profitable operating performance, an enhancement of its profile in the reinsurance market or continued improvement in its risk-adjusted capitalization levels.