AM Best Removes From Under Review With Developing Implications and Affirms Credit Ratings of Summit Insurance Company Limited

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Summit Insurance Company Limited (Summit) (Nassau, Bahamas). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Summit’s balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

Summit operates in the Bahamas only, where it has strong brand recognition and competes for business among the top insurance writers on the island. However, the operating disruption and the catastrophic damages caused by Hurricane Dorian prompted an AM Best response to place Summit under review with developing implications, along with the other rated Bahamas-domiciled market participants. AM Best has since evaluated Summit’s loss estimates and related reinsurance contracts and expects this to be an earnings event since loss estimates are within its current reinsurance coverage, and the net impact to the organization is anticipated to be its contract retention amount.

Summit’s balance sheet strength is at the strongest level based on supportive risk-adjusted capitalization, favorable earnings, which have been accretive to surplus growth especially in non-catastrophe affected years, and the extensive use of reinsurance to reduce Summit’s net exposure to natural catastrophes. Hurricane Dorian was instructive, since despite substantial gross losses, Summit’s net loss is expected to be its reinsurance treaty retention. Overall operating performance has been strong (especially in non-catastrophe years) and profitability ratios have compared favorably with its peer group. However, Summit’s business profile is considered limited due to its geographic and product line concentration. This exposes the company to continuing highly competitive soft pricing conditions, moderate economic and political risk, and elevated financial system risk, as well as changes in the underwriting cycle and the potential for significant losses from severe weather-related events.

This press release relates to Credit Ratings that have been published on AM 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 AM 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 AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency and information provider with an exclusive focus on the insurance industry. Visit www.ambest.com for more information.