TOWER HILL INSURANCE IN SPAT WITH AM BEST

Florida-based Tower Hill Insurance has been downgraded two notches by rating agency AM Best, to D (poor) from B (fair), with a negative outlook. AM Best asserted that the company had failed to buy enough reinsurance. Don Matz, president of Tower Hill, said that the matter was a “fundamental disagreement between us and AM Best in capital management”. Mr Matz said that Tower Hill had bought private reinsurance rather than use the Florida Hurricane Catastrophe Fund (FHCF), claiming that this meant that Tower Hill’s insurance entities were “more secure than ever in the event of a catastrophic loss”. Tower Hill has asked AM Best to stop rating it. The insurer said that it had purchased $850m in reinsurance cover, but had not met AM Best’s threshold requirement to buy reinsurance to cover two 1-in-100-year events in the same year. Tower Hill noted that “there has not been such an event in recorded history”. Tower Hill said that the reinsurance it had bought covered it against a 1-in-140 year first event a 1-in-60 year second event.