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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 28, 2004 12:00 AM (EDT)
A.M. Best Co. has assigned financial strength ratings of A- (Excellent) to Tower Hill Prime Insurance Company (Tower Hill Prime) (Gainesville, FL) and its affiliate, Tower Hill Preferred Insurance Company (Tower Hill Preferred) (Gainesville, FL). The outlook for both ratings is stable.
The ratings reflect the companies' favorable capital position, management's strong track record, agency relationships in the Florida property market and conservative operating strategy. The companies are led by a management team that has extensive knowledge of the Florida residential property market. This is particularly evident as the affiliated managing general agency (MGA), Tower Hill Insurance Group, Inc. (Gainesville, FL), is the fourth-largest writer of residential property in the state. The companies not only benefit from extensive management expertise but also from the highly sophisticated underwriting, marketing and claims systems of the group.
A.M. Best utilized a 10-year loss analysis of the Tower Hill Insurance Group's managed book of business. With the implementation of the organization's risk-bearing strategy via these entities, A.M. Best anticipates that the individual companies' underwriting results will closely mirror those that were historically produced by the Tower Hill Group. In addition, A.M. Best anticipates the same level of conservatism that has been demonstrated by its management team over the years. Finally, the companies are adequately capitalized to support their current writings, with additional capital available to support future growth.
Although the companies effectively utilize reinsurance to mitigate their extensive catastrophe exposure to a manageable level, it results in an elevated dependence upon reinsurance that is evidenced by their above average gross leverage and comparatively low premium retention. As a result, the companies are exposed to the risk of contract dispute, non-payment and reinsurance availability/pricing issues. Further, any unfavorable changes to these programs could potentially negatively impact operating results. However, these risks are mitigated by the use of a diversified group of high quality reinsurers, the considerable purchasing power of the entire Tower Hill franchise and the long-term relationships the company has maintained with a number of its reinsurers.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.