AM Best has affirmed the A (excellent) financial strength rating and the long-term issuer credit ratings of “a” (excellent) for insurer Allshores General Insurance Company (Bermuda) and Island Heritage Insurance Company Ltd.

The ratings agency also affirmed the long-term issuer credit rating of “bbb” (good) for parent company Allshores Ltd.

The outlook for all ratings is stable.

AM Best said the ratings are based on Allshores’ balance sheet strength (rated as “strongest”), as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The ratings agency also noted that Allshores’ health products were “under pressure” from increasing use of health services and higher healthcare costs.

Allshores was formed by the amalgamation of BF&M and Argus last year.

“This affirmation reflects the strength of our balance sheet, the quality of our operating performance and the successful integration of our two organisations,” said Abigail Clifford, group president and CEO of Allshores.

“As we continue building Allshores, maintaining the confidence of our customers, partners and shareholders remains a top priority. These ratings demonstrate that we are well positioned to support the communities we serve for the long term.

“Scale matters in small communities. It allows us to invest in our people, technology, products and customer experience while maintaining the financial strength needed to be there when our customers need us most. These ratings are an important validation of that strategy.”

AM Best rates the combined company’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), as “strongest”.

“Allshores’ investment portfolio is composed of high quality, highly marketable fixed-income securities, with modest exposure to mortgage loans and more than adequate cash and equivalents on its balance sheet,” AM Best stated.

“The liability risks are managed through several reinsurance treaties covering its health, life and property and casualty businesses and are with highly rated counterparties.

“Like its peers, Allshores maintains a high reinsurance dependence, particularly in its property business, given the exposure to catastrophe-prone regions. AM Best notes that Allshores is lowering its exposure in certain higher catastrophe-prone geographies.”

The ratings agency noted: “Allshores’ health products remain under pressure from increasing utilisation post-pandemic and increased care costs for both domestic and off-island care.

“Bermuda is still developing a major policy towards a public health benefit, and the uncertainty remains a planning challenge for Allshores.”

Allshores’ operating performance is reflective of a trend of profitable earnings, both pre- and post-amalgamation, the rating agency added.

“Earnings are diversified and driven by line of risk business and services. Following the amalgamation, the organisation was able to recognise synergies and cost savings due to increased scale,” AM Best stated.

Allshores said the amalgamation created a well-diversified company and is “a market leader and the largest insurer in Bermuda writing coverage in property/casualty, marine and health insurance products”.