The reciprocal exchange structure is an efficient way to build surplus through annual surplus contributions by subscribers, a spokeswoman for Tower Hill said at the time. “We look forward to expanding together in 2022 and beyond.” “Especially for our agency partners, transitioning to the reciprocal insurer business model affords continued growth through increased capacity availability,” Tower Hill Group said in a statement in May. The move raised questions at the time, but Tower Hill officials assured the market that all was well. And in May, Tower Hill Insurance Group said it had voluntarily withdrawn its Demotech rating for Tower Hill Preferred and Tower Hill Signature companies, noting that policies were being transferred into the reciprocal exchange. AM Best announced in April that it had cut the rating from B++ to B+, due in part to underwriting losses in the previous five years. It’s the second downgrade for Tower Hill Prime this year. That has left the company over-leveraged with loans. Tower Hill Prime continues to face challenges in setting adequate reserves, thanks in part to the excessive litigation plaguing most Florida property insurers. It could also mean trouble for policyholders who have mortgages, since secondary mortgage companies often require HO insurers to maintain top financial ratings.ĪM Best said that the financials don’t look good. Meanwhile, Tower Hill Prime’s stability rating by another firm, Demotech, has remained at “A exceptional,” Demotech reported.Īn appointed agent for Tower Hill said the AM Best downgrade could be “devastating” for the insurer, and would mean Tower Hill Prime won’t be able write as much business it needs to. The same day that AM Best announced the downgrade, Tower Hill said it no longer wished to participate and asked that its TH Prime rating be withdrawn altogether. “The downgrade of Tower Hill Prime’s Long-Term ICR (issuer credit rating) reflects a significant decline in its overall risk-adjusted capitalization, as measured by the best capital adequacy ratio (BCAR), to the very strong level from the strongest level, coupled with continued surplus erosion and elevated financial leverage of the holding company,” AM Best said in a statement.
Tower Hill has said Prime plans to exit the Florida market sometime in 2023, and its personal lines policies will be moved to the exchange. from B+ (good) to B (fair) and said the outlook for the company is negative. 28 that it had downgraded the financial strength rating for Tower Hill Prime Insurance Co. Overall, the company remains in good financial shape, company officials said.īut AM Best said early this month that the changes do little to mask some potential financial problems, including shortcomings in surplus and capital. Tower Hill officials, whose Gainesville-based companies as recently as late 2021 held more than 5% of the Florida property market, have said for more than a year that policies from several TH companies are being rolled into Tower Hill Insurance Exchange, a type of reciprocal insurer.
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