NOVEMBER 07, 2019 11:20:07 Eastern Standard Time
AM Best Removes From Under Review With Developing Implications and Affirms Credit Ratings of Summit Insurance Company Limited
FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 07, 2019 11:20:07 Eastern Standard Time
The ratings reflect Summit’s balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
Summit operates in the Bahamas only, where it has strong brand recognition and competes for business among the top insurance writers on the island. However, the operating disruption and the catastrophic damages caused by Hurricane Dorian prompted an AM Best response to place Summit under review with developing implications, along with the other rated Bahamas-domiciled market participants. AM Best has since evaluated Summit’s loss estimates and related reinsurance contracts and expects this to be an earnings event since loss estimates are within its current reinsurance coverage, and the net impact to the organization is anticipated to be its contract retention amount.
Summit’s balance sheet strength is at the strongest level based on supportive risk-adjusted capitalization, favorable earnings, which have been accretive to surplus growth especially in non-catastrophe affected years, and the extensive use of reinsurance to reduce Summit’s net exposure to natural catastrophes. Hurricane Dorian was instructive, since despite substantial gross losses, Summit’s net loss is expected to be its reinsurance treaty retention. Overall operating performance has been strong (especially in non-catastrophe years) and profitability ratios have compared favorably with its peer group. However, Summit’s business profile is considered limited due to its geographic and product line concentration. This exposes the company to continuing highly competitive soft pricing conditions, moderate economic and political risk, and elevated financial system risk, as well as changes in the underwriting cycle and the potential for significant losses from severe weather-related events.
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