AM Best has revised the outlook to positive from stable and affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit rating (ICR) of “a-” of BF&M’s Island Heritage Insurance Company (Cayman Islands).The ratings reflect Island Heritage’s solid level of risk-adjusted capitalisation, favourable operating results, experienced management team and local market expertise, the agency said.“In addition, the ratings recognise Island Heritage's affiliation with its parent, BF&M Limited, a Bermuda domiciled publicly traded holding company. Island Heritage has parental support, and this affords the company access to the group's resources, including financial and investment management and information technology.“Solid underwriting results along with investment income have led to organic surplus growth in recent years, as well as a strong five-year average combined ratio. This has enabled Island Heritage to maintain more than adequate risk-adjusted capitalisation for its current business profile. The management team at Island Heritage has extensive knowledge of each island and maintains effective risk management strategies. The company focuses on the unique needs of the Caribbean property owner and designs its programs to provide the depth of coverage needed. In addition, catastrophe risk is mitigated by Island Heritage’s conservative reinsurance programme, which protects its capital from both the frequency and severity of events.”AM Best said that partially offsetting these favourable rating factors is the geographic concentration of Island Heritage’s business in the Caribbean, which exposes it to substantial losses from catastrophic events, the increasingly competitive landscape in its operating territories and local regulatory risk. Island Heritage, like other regional insurers, manages its exposure through the heavy use of reinsurance protection.