AM Best has upgraded the Financial Strength Rating to B (Fair) from B- (Fair) and the Long-Term Issuer Credit Rating to “bb” (Fair) from “bb-” (Fair) of Tower Bonding and Surety Company (Tower Bonding) (San Juan, PR). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.

The ratings reflect Tower Bonding’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).

The rating upgrades reflect a sustained improvement in Tower Bonding’s operating profitability over the most recent five-year period and through June 2024. Results have varied somewhat but remain in line with peers assessed as adequate. The combined and operating ratios are elevated in comparison with the AM Best composite average; however, the composite is skewed by large national surety writers. The company’s elevated expense ratio is driven by a high commission and its other expense structure, which follows the high expense ratio structure of other carriers in Puerto Rico.

Tower Bonding’s balance sheet strength metrics are stable as the result of improved profitability, which has driven policyholder surplus growth over the past five years. The business profile assessment is driven by a geographic concentration of risk and limited product diversification, since Tower Bonding only writes bail bonds in Puerto Rico; however, it is a market leader with minimal competition. The ERM assessment is driven by limited capabilities relative to its risk profile.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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