Local insurance company BF&M Limited has got a thumbs up from ratings agency AM Best resulting in the company?s financial strength rating being moved up a notch.

This week, AM Best announced that BF&M?s previous rating of A- (Excellent) had been upgraded to A (Excellent) and gave that rating a ?stable? outlook indicating that a change to the new rating was unlikely.

AM Best said its upgrade recognised the prudent business management of the company but also took into account the limited growth opportunities that BF&M has within such a small market.

A press statement said: ?This rating action recognises BF&M?s consistently strong operating performance, excellent capitalisation, experienced and focused management group and substantial market share in the Bermudian health care market.

?The group benefits from the favorable regulatory environment where health care coverages must be provided by Bermuda companies. Health care service providers are limited to annual rate changes.

In addition, AM Best said that BF&M, as the largest property/casualty writer on the Island on a gross premiums written basis, was careful to manage the level of risk it carried by being ?significantly reinsured to alleviate catastrophic risk?.

The ratings agency said this was seen in 2003 when BF&M suffered ?minimal net losses? after devastating Hurricane Fabian pounded the Island last September. Another plus for BF&M, according to AM Best, was being based in Bermuda with a ?legal system (that) significantly mitigates litigation risk?.

However, AM Best said the company?s advantages were ?partially offset by BF&M?s total dependence upon the insular and mature Bermudian economy, which limits the prospects for growth of the domestic insurance market.

?Ultimately, many factors related to the issue of economic scarcity are inherent in Bermuda?s economy and lead to high expense loads across all lines of business. BF&M also remains highly susceptible to catastrophe events because of Bermuda?s geographic location.?