The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Summit Insurance Company’s president yesterday said its ‘A grade’ rating from A. M. Best had provided a timely confidence boost for clients in Hurricane Matthew’s wake.

With just over 1,100 claims received to-date, Tim Ingraham said the A- (Excellent) financial strength rating would give property and casualty customers extra comfort that it could withstand the Category Three/Four storm’s claims.

“This will give our customers that little bit extra confidence in the company,” he told Tribune Business.

“I think the rating speaks to our financial strength having gone through a major hurricane. A. M. Best took a preliminary look at those numbers, looked at the reinsurance programmes, and felt secure in the balance sheet.”

A. M. Best initially examined Summit prior to Matthew, with this rating the first time it has ever provided one for the general insurance underwriter.

Mr Ingraham said Summit had waited until it made “economic sense” for the company to approach A. M. Best, and its portfolio growth and size, coupled with the desires of its reinsurance partners, had prompted it to make the move.

“We decided to go ahead and apply for one some time before the storm,” he explained. “We’d always looked at it and said that when it makes economic sense for us to do so, we will pursue it.

“As time goes on, more and more businesses and individuals you do business with pay more attention to whether you have an A. M. Best rating. It gives your international partners a bit more confidence to have a rating.”

Mr Ingraham said the rating would enhance perceptions of Summit, even though he did not expect it would result in “a huge boost” in insurance business.

Summit retained the leading rating despite the fact that Hurricane Matthew-related claims will likely slash its 2016 profits - possibly pushing it into a loss.

“Significant recent damage and losses from Hurricane Matthew will tarnish overall results for 2016,” A. M. Best said of the company.

“However, Summit’s catastrophe reinsurance programme adequately protects surplus from such events, and the balance sheet is expected to remain strong.”

It added: “The ratings reflect Summit’s supportive balance sheet strength, historically favourable operating results and leading market presence in the Bahamas.

“These rating strengths are partially offset by the company’s geographic and underwriting risk concentration, and the challenges that weakened economic conditions and strong competitive market pressure have created for Summit’s overall operating performance and growth opportunities.”

Summit, the carrier through which Insurance Management places most of its property and casualty business, was formed in response to a lack of market capacity following Hurricane Andrew in 1992.

“The company enjoys excellent brand recognition throughout its territory. Operating performance has historically been profitable due to prudent underwriting, conservative risk management and adequate reinsurance protection backed by quality reinsurance partners,” A. M. Best said.

“Risk-adjusted capitalisation is also sufficiently strong to support underwriting, investment and business risks, as well as strategic objectives.”

On the down side, the insurance rating agency added: “Market conditions in the Bahamas are highly competitive and pricing, particularly on property business, is soft. Organic growth potential is extremely limited.”