AM Best has assigned the recently-formed excess and surplus (E&S) lines insurer, Obsidian Specialty Insurance Company, a financial strength rating of A- (Excellent).
Obsidian Specialty is a program fronting carrier serving managing general agents, managing general underwriters and program managers. It was established in Delaware as a domestic surplus lines insurer, with the carrier receiving its certificate of authority in September 2020.
The insurer was capitalized with a $30 million cash contribution from fronting insurance holding company, Obsidian Insurance Holdings, as well as the contribution of 100% of the capital stock of Obsidian Insurance Company, an AM Best rated A- rated admitted insurance company.
The rating of Obsidian Specialty brings together Obsidian Insurance Company’s rating with Obsidian Specialty on a pooled basis. Both the Ohio and Delaware Departments of Insurance have approved the consolidated group entering into three inter-company agreements for administrative services, tax sharing and pooled reinsurance.
AM Best’s ratings reflect the consolidated group’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
Obsidian was formed earlier this year in partnership with insurance industry executives and Genstar Capital. The hardening rates in the E&S market, as well as an increase in overall MGA activity in the E&S market, drove the strategic decision to form Obsidian Specialty, according to a company press release
Source: Obsidian Insurance Holdings Inc.
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