Rating agency A.M. Best Co. affirmed a stable outlook for Island Heritage Insurance Company, Ltd headquartered in the Cayman Islands, with ratings of A- (excellent) for financial strength and an issuer credit rating of “A-”.
The ratings of Island Heritage reflect its solid level of risk-adjusted capitalisation, favourable operating results, experienced management team and local market expertise, the insurer said in a press release.
The positive rating factors are derived from Island Heritage’s solid underwriting results and historically positive investment income, which have led to organic surplus growth in four of the last five years, as well as a strong five-year average combined ratio, the statement said.
Island Heritage focuses on the unique needs of the Caribbean property owner and designs its programmes to provide the depth of cover needed. At the same time the level of catastrophe risk is mitigated by Island Heritage’s reinsurance programme, which was enhanced significantly following the severe events of 2004 and 2005.
The revised reinsurance structure protects the company’s capital from both the frequency and severity of events in a relatively more efficient and effective manner, the company said.
Island Heritage CFO Jon Coleman. Partially offsetting these positive rating factors is Island Heritage’s geographic concentration, substantial dependency on reinsurance, competitive market and local regulatory risk.
The company’s geographic concentration in the Caribbean exposes Island Heritage to storm and hurricane activity, as evidenced during 2004, 2005 and 2008, when the Caribbean was impacted by multiple hurricanes in a single season.
However, the losses from these inevitable natural events are kept at a manageable level due to the company’s extensive reinsurance programme.