OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of B- (Fair) and the Long-Term Issuer Credit Rating of “bb-” (Fair) of Tower Bonding & Surety Company (Tower Bonding) (San Juan, Puerto Rico).
The ratings reflect Tower Bonding’s balance sheet strength, which AM Best assesses as adequate, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).
The outlook revisions to stable are based on AM Best’s expectation of continued stabilization in Tower Bonding’s balance sheet strength through organic surplus growth and more diversified investments. Tower Bonding’s balance sheet strength assessment of adequate is based on the company’s strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), along with its conservative underwriting and reserving leverage measures. These positive rating factors are offset by modestly elevated equity leverage, as well as limited financial flexibility and scale of operations.
Tower Bonding’s business profile is limited due to its geographic and product concentration as a bail bonds insurer in Puerto Rico. However, the company has a leadership position in its niche. AM Best considers the company’s ERM profile to be marginal as Tower Bonding’s risk management capabilities do not align fully with its risk profile.
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