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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - AUGUST 26, 2009 12:00 AM (EDT)
A.M. Best Co. has downgraded the financial strength ratings (FSR) to D (Poor) from B (Fair) and issuer credit ratings (ICR) to "c" from "bb" of Tower Hill Preferred Insurance Company, Tower Hill Prime Insurance Company and Omega Insurance Company (known collectively as Tower Hill). The outlook for these ratings is negative. All companies are domiciled in Gainesville, FL
Subsequently, A.M. Best has withdrawn the ratings and assigned a category NR-4 (Company Request) to the FSRs and an "nr" to the ICRs in response to Tower Hill's management's request to be removed from A.M. Best's interactive rating process.
These rating actions consider the companies' exposure as Florida personal property writers to frequent and severe catastrophic weather events, which is significant on both a gross and net basis, in relation to their surplus positions. However, the entities current catastrophe programs rely less on the Florida Hurricane Catastrophe Fund (FHCF), as no reinsurance was purchased from the FHCF's Temporary Increase In Coverage Limits (TICL) layer, as the entities remained skeptical on the ability of the FHCF to fund all obligations associated with a severe hurricane event. In addition, as the companies recently eliminated their quota share programs, combined with modest catastrophe reinsurance coverage in potential multiple event scenarios, A.M. Best views their risk-adjusted capital positions as poor, particularly as measured on a catastrophe stress test basis. The uncertainties inherent in the companies' risk-adjusted capital positions and overall catastrophe reinsurance programs are reflected by the negative outlook.
Partially offsetting these negative rating factors are the companies' efforts in improving their underwriting standards and geographic spread in Florida, as well as the historical financial support from their parent companies and management's long standing presence in the Florida property insurance market.
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.