AM Best Affirms Credit Ratings of TDC Insurance Company Limited
AM 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) is stable.
The ratings reflect TDCIC's balance sheet strength, which AM 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 is supported by risk-adjusted capitalization at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR). However, the company is relatively small with less than USD 20 million in equity, and relies heavily on the strength of its reinsurers to manage its catastrophe exposure, minimize earnings volatility and protect surplus. Operating performance has generally been favorable as a result of prudent underwriting and conservative risk management strategies. Results have also been enhanced in recent years by the absence of losses from catastrophe events.
Although TDCIC is a leading automobile and property writer in the Federation of St. Kitts and Nevis, its business profile is considered limited because its operations are confined to its domestic market. St. Kitts and Nevis is highly dependent upon tourism and vulnerable to price changes in key commodities. Other considerations include a difficult local macroeconomic environment and highly competitive market conditions. In addition, losses from catastrophic weather events remain a significant threat to TDCC. However, this potential exposure is reduced to a manageable level by a conservative reinsurance program placed with a high quality panel of reinsurers.
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