AM Best has affirmed the credit ratings for Summit Insurance Company Limited, according to a recent announcement.
Ratings Affirmed
The Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) for Summit Insurance Company Limited (Summit), located in Nassau, Bahamas, have both been affirmed by AM Best. However, the outlook for these Credit Ratings is negative.
AM Best’s assessment reflects Summit’s balance sheet strength, which is considered strongest, along with its strong operating performance, limited business profile, and appropriate enterprise risk management.
Negative Outlook Factors
The negative outlook reflects a downward trend in operating performance over the past several years, attributed to unprofitable underwriting and lower returns. Historically, Summit has demonstrated strong profitability, excluding years impacted by significant catastrophic events in the Bahamas.
Underwriting pressures following Hurricane Dorian highlight the challenging operating environment within the Bahamas. This is characterized by a high dependence on reinsurance and shifts in primary market pricing. Profitability metrics have also fallen short of historical results.
The hardening of the overall reinsurance market has further limited opportunities for profitable growth in property lines. However, Summit’s management has initiated several actions to improve operating performance. These include:
- Growth in lines of business less reliant on reinsurance
- Expense reduction measures
- Efforts to reduce reinsurance costs without compromising capital protection
Operating results have shown improvements through the end of 2024.
Balance Sheet Strength
AM Best assesses Summit’s balance sheet strength at the strongest level. This is based on its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and its moderate-risk investment portfolio. The company has prioritized protecting capital over maximizing operating performance amidst rising reinsurance costs.
Organic growth of surplus has been achieved through favorable earnings, offset by shareholder dividends. AM Best anticipates that risk-adjusted capitalization will continue to support Summit’s strongest-level balance sheet strength assessment.
Business Profile and Additional Information
Summit’s limited business profile assessment reflects its high geographic concentration and competitive pressures. The company’s exclusive operations in the Bahamas expose it to high economic and financial system risk, as well as the country’s moderate political risk.
For complete rating information, including details about the office responsible for each individual rating, please see AM Best’s Recent Rating Activity web page. Additional information regarding the use and limitations of Credit Rating opinions, Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency focusing on the insurance industry. The company conducts business in over 100 countries with regional offices worldwide.
