Less than an hour after Hurricane Ian made landfall in Cayo Costa, Fla., one more insurance rating agency action added to the weight of the negative impacts hurling towards homeowners and businesses in the storm-torn state.

AM Best’s announcement that it had downgraded and simultaneously withdrawn the credit ratings of Tower Hill Prime Insurance Company crossed the wires just before 4 p.m. yesterday, overshadowed by news of Hurricane Ian’s 3:05 p.m. landfall and the impacts to property and people throughout the Sunshine State.

AM Best has downgraded the Gainesville, Fla. company’s financial strength rating to B (Fair) from B+ (Good), and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bb” (Fair) from “bbb-” (Good) of Tower Hill Prime Insurance Company.

The outlook of the ratings is negative.

Concurrently, AM Best withdrew these ratings at the company’s request, the rating agency said.

The Tower Hill Insurance Group website did not yet reflect the withdrawal of rating, which was still shown as B+ last night. The latest update in the news and events section of the website was a binding notice posted on Monday, stating that “The Tower Hill Companies are not currently binding new insurance policies or accepting requests to change coverages on existing policies” for the entire state of Florida and for numerous counties in Georgia, Alabama and South Carolina.

The AM Best ratings reflect Tower Hill Prime’s balance sheet strength, marginal operating performance, limited business profile and appropriate enterprise risk management. Balance sheet strength is adequate, according to AM Best.

AM Best said the downgrade of Tower Hill Prime’s Long-Term ICR reflects a significant decline in its overall risk-adjusted capitalization. “While Tower Hill Prime has benefitted from capital contributions through the holding company and the issuance of surplus notes, the quality of operating company capital has deteriorated as surplus notes currently make up more than half of Tower Hill Prime’s second quarter 2022 surplus.”

“Additionally, Tower Hill Prime continues to face challenges in adequately setting reserves,” the AM Best announcement said, noting that reserves are continuing to develop adversely in spite strengthening measures—influenced partly by widespread social inflation driven by increased litigation in the company’s operating territory.

Best said the negative outlooks reflect the rating agency’s concerns about current risk mitigation strategies, and execution risk in exiting the volatile Florida personal lines segment. The negative outlooks also consider pressures on the company’s operating performance, the announcement said noting that recent results are not aligning with AM Best’s assessment of marginal.

“Tower Hill Prime faces several challenges ranging from severe hurricanes, more frequent lower level weather-related events and social inflation,” Best added.

Explaining the execution risk, AM Best reported that Tower Hill Prime has planned to non-renew about 50 percent of its Florida personal lines business by the end of 2022 and completely exit the segment by 2023. The company’s Florida personal lines policies will be moved to Tower Hill Insurance Exchange, a separate entity from Tower Hill Prime created specifically to house this volatile segment.