AM Best Assigns Credit Ratings to Oxford Insurance Company MT LLC

AM Best has assigned a Financial Strength Rating (FSR) of A (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “a” (Excellent) to Oxford Insurance Company MT LLC (Oxford MT) (Helena, MT). The outlook assigned to these Credit Ratings (ratings) is stable. Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) of 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 of these ratings is stable. The aforementioned companies are collectively referred to as Oxford.

These ratings reflect Oxford’s balance sheet strength, which AM Best assesses 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 expectation that the companies will continue to generate strong operating performance and maintain very strong balance sheet strength across the platform and respective captive cells. The active cells remain very strongly capitalized individually and collectively with strong operations. AM Best will monitor governance related to the company’s new litigation defense coverage as it is communicated among the management, the board of directors and the cell owners.

Oxford was initially formed in Delaware in 2010 as a special purpose captive company. In 2022, Oxford added Oxford MT as an adjunct to the existing cell platform companies to write exactly the same business, while diversifying its exposure across domiciles. Oxford operates under a pooling arrangement that enables all active cells on its platforms 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. Also in 2022, but unrelated, Oxford introduced a litigation finance product for a limited number of cells formed for that specific exposure. The product is new and relatively untested. The cells pay premium but do not participate in claims submitted to the loss pool. Capitalization and claims paying capacity is fully supported by the active pool members at a comfortable level.

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 500 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.

Oxford’s 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.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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