Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on Oil Casualty Insurance Ltd. (OCIL) to "Triple-B-plus" from "A-minus." The New York-based ratings service added that the outlook is stable.
OCIL is a mutual insurance company set up to provide oil companies, especially those with drilling rigs and platforms in the Gulf of Mexico, with coverage.
"The rating action reflects our concern about OCIL's business model, which relies highly on reinsurance and focuses on a single line of business within a relatively narrow industry sector," explained Laline Carvalho, S&P credit analyst, in a statement. "In addition, we believe OCIL's policy limits are relatively high in view of its relatively small net premium base and annual earnings power, and the high excess nature of the policies it offers inherently exposes OCIL to significant volatility in its balance sheet and income statement."
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