AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Summit Insurance Company Limited (Summit) (Nassau, Bahamas). The outlook of these Credit Ratings (ratings) is negative.

The ratings reflect Summit’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

The negative outlooks reflect a downward trend for operating performance over the past several years with unprofitable underwriting and lower returns. Historically, Summit has been very profitable excluding years the Bahamas suffered a significant catastrophe event. Underwriting pressure post-Hurricane Dorian is reflective of the operating environment in the Bahamas, where reinsurance dependence is very high and primary market pricing, which has been soft historically, has shifted. Profitability metrics have lagged historical results. The overall reinsurance market hardening has presented limited opportunities for profitable growth in property lines. However, Summit’s management has taken initiatives toward improving operating performance through multiple actions including growth in lines of business not dependent on reinsurance, expense reduction initiatives and working to lower the cost for reinsurance coverage without impacting capital protection. Operating results have shown improvement through year-end 2024 but it remains uncertain if operating results will recover to levels that fully support a strong operating performance assessment in the near term.

AM Best assesses Summit’s balance sheet strength at the strongest level, based on its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), in addition to its moderate risk investment portfolio. The organization has prioritized protecting capital over operating performance when pressured by rising reinsurance costs. Organic growth of surplus has been achieved through favorable earnings, offset by shareholder dividends. AM Best expects risk-adjusted capitalization to continue to support Summit’s strongest level balance sheet strength assessment.

High geographic concentration and competitive pressures also are reflected in Summit’s limited business profile assessment. The company’s limited geographic reach, operating solely in the Bahamas, exposes it to high economic and financial system risk, as well as the Bahama’s moderate political risk.

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