OLDWICK: Insurance sector rating agency AM 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) and 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). The outlook assigned to these Credit Ratings (ratings) is stable.

These companies are collectively known as Oxford Insurance Companies (Oxford).

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

The stable outlooks reflect AM Best’s expectations that the companies will continue to generate strong operating performance and maintain very strong capitalization.

The companies’ balance sheet strength is very strong, as management uses a number of metrics to ensure solvency of all captive cells at all times, including growth and underwriting leverage, while collateralizing premiums and losses and utilizing extensive risk controls. Oxford was initially formed in Delaware in 2010 as a special purpose captive company.

It now operates under a pooling arrangement that enables all active cells to retain 20% of their own written premium with any claims submitted to the unified pool; the remaining 80% of written premium is shared pro rata across a very large base of insureds of similar size, avoiding concentrations and dependence on any single cell. 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 program needs. The uncommon, but efficient, structure enables the insureds 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. It is accordion-like in nature, in that cells can be added or closed without impacting the remaining cells, except in determining pro rata shares of premium and losses.

ERM 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.