The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Summit Insurance has seen its creditworthiness maintained by the insurance industry's top rating agency after its "profitability ratios" outperformed rivals.

AM Best reaffirmed the property and casualty insurer's financial strength rating of A- (Excellent) and long-term issuer credit rating of "a-", together with a stable outlook.

Explaining its decision, AM Best said: "The ratings reflect Summit's balance sheet strength, which AM Best categorises as strongest, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

"The ratings also take into consideration the highly competitive property/casualty insurance market conditions in The Bahamas, the company's elevated gross exposure to natural catastrophes and the moderate country risk of The Bahamas."

It added: "The balance sheet strength is at the strongest level based on supportive risk-adjusted capitalisation; favourable earnings which have been accretive to surplus growth; and the extensive use of reinsurance to reduce Summit's net exposure to natural catastrophes such as hurricanes.

"Overall operating performance has been strong and profitability ratios have been better than its peer group. However, the business profile is considered limited due to Summit's geographic and product line concentration. This exposes the company to highly competitive soft pricing conditions, moderate economic and political risk, elevated financial system risk, as well as changes in the underwriting cycle and the potential for significant losses from severe weather-related events."

The rating agency concluded: "The outlook is stable as AM Best anticipates that Summit will be able to maintain its balance sheet strength through continued strong earnings and effective use of reinsurance.

"The ratings could be impacted either positively or negatively by changes in The Bahamas' country risk tier ranking. The ratings also may be negatively impacted by a material weakening in Summit's risk-adjusted capitalisation or a weakening in overall profitability or underwriting performance to a level that trails similarly rated peers."