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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 29, 2017 03:28 PM (EDT)
A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and Long Term Issuer Credit Rating of “a-” of Tower Hill Prime Insurance Company (Tower Hill Prime) (Gainesville, FL).
The revised outlooks reflects multiple years of unfavorable underwriting performance as a result of weather-related losses, adverse development and the ongoing pressure stemming from the assignment of benefits (AOB) issue in Florida. Operating performance is not expected to improve in 2017 as the impact of Hurricane Irma is projected to drive an underwriting loss for the year. Loss estimates from the event have been incorporated into A.M. Best’s review. While hurricanes have been a significant factor in leading to deteriorated performance, the increased frequency and severity of water claims has also played a prominent role over the last few years. Hurricanes Irma and Matthew, as well as the AOB loss impacts, illustrate the elevated risk that Tower Hill Prime is exposed to given the majority of its business is concentrated in Florida. These risks are partially mitigated through a comprehensive reinsurance program.
Despite the negative outlook, Tower Hill Prime’s ratings reflect its appropriate risk-adjusted capitalization which is enriched by demonstrated support from an affiliated managing general agent (MGA). Over the past five years, the MGA has contributed significant capital into the company to offset operating losses and improve overall capitalization, particularly in the most recent two years. Furthermore, management has initiated several measures to improve operating results, which include rate increases, improved contract language and non-renewal of unprofitable business.
Negative rating action could occur if operating performance continues to be materially unfavorable or from erosion in surplus and subsequently risk-adjusted capitalization.
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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