|[July 29, 2014]
A.M. Best Upgrades Ratings of Island Heritage Insurance Company Limited
OLDWICK, N.J. --(Business Wire)--
A.M. Best has upgraded the financial strength rating to A
(Excellent) from A- (Excellent) and the issuer credit rating to "a" from
"a-" of Island Heritage Insurance Company Limited (Island
Heritage) (Cayman Islands). The outlook for both ratings has been
revised to stable from positive.
The rating upgrades reflect Island Heritage's solid level of
risk-adjusted capitalization, favorable operating results, experienced
management team and regional market expertise. Also reflected in the
upgrades is Island Heritage's affiliation with its parent, BF&M
Limited, a Bermuda-domiciled publicly traded holding company. Island
Heritage has parental support, and this affords the company access to
the group's resources, including financial and investment management,
information technology and reinsurance.
Solid underwriting results, along with investment income, have led to
organic surplus growth in recent years, as well as a strong five-year
average combined ratio. This has enabled Island Heritage to maintain
more than adequate risk-adjusted capitalization for its current business
profile. The management team at Island Heritage has extensive knowledge
of each island and mantains effective risk management strategies. The
company focuses on the unique needs of the Caribbean property owner and
designs its programs to provide the depth of coverage needed. In
addition, catastrophe risk is mitigated by Island Heritage's
conservative reinsurance program, which protects the company's capital
from the frequency and severity of events.
Partially offsetting these favorable rating factors is the geographic
concentration of Island Heritage's business in the Caribbean, which
exposes the company's operations to the effects of catastrophic events,
the increasingly competitive landscape in its operating territories and
local regulatory risk. Island Heritage, like other regional insurers,
manages its exposure by maintaining an extensive reinsurance program to
restrict losses from these inevitable natural events at a manageable
Island Heritage is well positioned at the current rating level. Factors
that may lead to negative rating actions include a sustained decline in
underwriting profitability, significant deterioration in risk-adjusted
capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), and
a downgrade in Cayman Island's country risk tier rating.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
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