OLDWICK, N.J.–(BUSINESS WIRE)–July 02, 2013–  A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit rating (ICR) of “a-” of Island Heritage Insurance Company Limited (Island Heritage) (Cayman Islands).

The ratings reflect Island Heritage’s solid level of risk-adjusted capitalization, favorable operating results, experienced management team and local market expertise. In addition, the ratings recognize Island Heritage’s affiliation with its parent, BF&M Limited, a Bermuda domiciled publicly traded holding company. Island Heritage has parental support, and this affords the company access to the group’s resources, including financial and investment management and information technology.

Solid underwriting results along with investment income have led to organic surplus growth in recent years, as well as a strong five-year average combined ratio. This has enabled Island Heritage to maintain more than adequate risk-adjusted capitalization for its current business profile. The management team at Island Heritage has extensive knowledge of each island and maintains effective risk management strategies. The company focuses on the unique needs of the Caribbean property owner and designs its programs to provide the depth of coverage needed. In addition, catastrophe risk is mitigated by Island Heritage’s conservative reinsurance program, which protects its capital from both the frequency and severity of events.

Partially offsetting these favorable rating factors is the geographic concentration of Island Heritage’s business in the Caribbean, which exposes it to substantial losses from catastrophic events, the increasingly competitive landscape in its operating territories and local regulatory risk. Island Heritage, like other regional insurers, manages its exposure through the heavy use of reinsurance protection.

Factors that could lead to a rating upgrade include continued strong underwriting performance and overall profitability, and an upgrade in Cayman Island’s country risk tier rating. Factors that may lead to negative rating actions include a sustained decline in underwriting profitability, significant deterioration in risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio and a downgrade in Cayman Island’s country risk tier rating.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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