KBRA Affirms Ratings for Tower Hill Insurance Group
13 Jun 2025 | New York
KBRA affirms the A- insurance financial strength rating (IFSR) for Tower Hill Prime Insurance Company (THP), the BBB+ IFSR for Tower Hill Insurance Exchange (THIE), and the BB+ long term credit rating (LTCR) for the $295 Million Senior Surplus Notes issued by THIE. The Outlook for THP remains Negative. The Outlooks for all other ratings are Stable.
The ratings reflect the experienced management team, adequate catastrophe reinsurance, conservative investment portfolio, and declining but still adequate risk-adjusted capital metrics. THP’s capital position has benefitted from ongoing capital contributions from its owners and affiliated MGA. KBRA views both companies’ investment portfolios as conservative. Moreover, the organization’s distribution relationships are broad and well-established, including affiliates of well-recognized national direct writers as well as online agencies.
KBRA notes that THIE’s Florida personal lines policies are reinsured under one catastrophe reinsurance tower and THP has a separate catastrophe reinsurance tower for its business. KBRA views THP’s catastrophe reinsurance program as strong, covering the 1 in 241-year event, while the Florida personal lines reinsurance program covering THIE is prudent.
Balancing these strengths are the organizations’ exposure to natural catastrophes, overall lack of geographic and product diversification, and volatile adverse loss reserve development trends at THP prior to 2023. THIE writes 100% of its premiums in Florida, a state exposed to both natural catastrophes and historically significant legal challenges for residential property insurance writers, although legislative changes appear to have fostered an improved operating environment. The group seeks to mitigate this concentration through product and geographic expansion in THP, with plans to grow in the small commercial lines market and to secure additional state licenses. Additionally, as a top-ten Florida homeowners’ writer, any sizeable hurricane activity or significant change in limits/costs for reinsurance may constrain THIE’s operating position.
Factors that can positively impact the ratings include sustained operating profitability, material organic surplus growth, or a favorable change in risk profile.
Factors that could negatively impact the ratings include weather events negatively impacting the balance sheet, continued underwriting losses, significant negative variance to projections provided to KBRA, inability to obtain reinsurance on acceptable terms and pricing, causing an increase in loss exposure, a reduction in the company’s ability to underwrite policies or a drag on earnings, or an unfavorable change in risk profile.
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