AM Best Upgrades Ratings for Tower Bonding in San Juan, PR
- AM Best upgraded Tower Bonding and Surety Company's ratings following improved operating profitability.
- The company faces challenges such as elevated expense ratios and a limited product offering, primarily writing bail bonds in Puerto Rico.
- The upgrade reflects strengthened financial metrics and places the company in a favorable position within a competitive yet concentrated market.
In Puerto Rico on October 24, 2024, AM Best announced the upgrade of Tower Bonding and Surety Company's Financial Strength Rating to B (Fair) and the Long-Term Issuer Credit Rating to 'bb' (Fair). This followed a period of improved profitability over the last five years. Despite still experiencing elevated expense ratios due to high commissions and operational costs typical within the local insurance market, the company demonstrated considerable balance sheet strength. While the current ratings reflect an adequate assessment of operating performance and financial stability, Tower Bonding faces challenges related to a concentrated risk profile and limited product offerings, which mainly encompass bail bonds. The company maintains a distinguished position in a minimally competitive landscape, yet its enterprise risk management capabilities require enhancement. With the outlook revised to stable from positive, these changes accentuate the company's ongoing improvements and stable metrics. This rating upgrade serves to bolster Tower Bonding's market presence and sustain its growth trajectory amidst the specialty risks of the surety market in Puerto Rico.