Best’s News & Research Service - August 29, 2018 08:58 AM (EDT)
A.M. Best Affirms Credit Ratings of TDC Insurance Company Limited
- August 29, 2018 08:58 AM (EDT)
Oldwick //BestWire// - A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of TDC Insurance Company Limited. (TDCIC) (St. Kitts and Nevis). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect TDCIC’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
TDCIC’s balance sheet strength assessment reflects the company’s strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), history of favorable overall operating performance, and an effective reinsurance program that mitigates exposure to catastrophic loss events.
TDCIC is a leading motor and property writer in the St. Kitts and Nevis markets. The company has consistently produced favorable underwriting results, which have been complemented by a stable level of investment income. A profitable overall earnings trend and relatively modest dividend requirements have contributed to surplus growth and a sustained solid level of risk-adjusted capitalization. Additional rating considerations include difficult local macroeconomic conditions and highly competitive market conditions. The company also has significant loss exposure in the region to catastrophic weather events; however, based on management’s view of this exposure, the risk is reduced materially by a reinsurance program backed by quality reinsurers. Prospectively, earnings remain subject to a mature, highly competitive regional market and catastrophe losses, given its exposure. Although TDCIC has a solid regional business presence, its business profile is limited as it operates primarily in St. Kitts and Nevis, which are vulnerable to price changes in key commodities and highly dependent upon tourism. Economic conditions in these territories continue to improve modestly.
The stable rating outlooks reflect A.M. Best’s expectation that the company’s rating fundamentals will remain unchanged in the intermediate term, including balance sheet strength remaining in the strongest category and overall operating performance commensurate with similarly rated peers.
Negative rating action could occur should operating performance deteriorate over time due to a decline in underwriting standards, inadequate pricing, an upward trend in claims frequency or severity, changes in the regulatory, legislative or economic condition in St. Kitts and Nevis or if risk-adjusted capitalization were to significantly weaken. This may occur from a material loss of surplus should catastrophic events exceed the limits of the company’s reinsurance protection.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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