OLDWICK, N.J.–(BUSINESS WIRE)–A.M. Best has upgraded the Financial Strength Rating (FSR) to B++(Good) from B+ (Good) and the Long-Term Issuer Credit Rating (Long-TermICR) to “bbb” from “bbb-“ of Sagicor Life Jamaica Limited (SLJ)(Kingston, Jamaica). Concurrently, A.M. Best has affirmed the FSR of A-(Excellent) and the Long-Term ICR of “a-” of Sagicor Life Inc.(St. Michael, Barbados). A.M. Best also has affirmed the FSR of A-(Excellent) and the Long-Term ICR of “a-” of Sagicor GeneralInsurance Inc. (Sagicor General) (Bridgetown, Barbados) and SagicorLife Insurance Company (Sagicor Life USA) (Austin, TX).
In addition, A.M. Best has affirmed the Long-Term ICR of “bbb-” of theultimate parent, Sagicor Financial Corporation Limited (SFC)(Bermuda) and the Long-Term Issue Credit Rating of “bbb+” on the USD 320million, 8.875% senior unsecured notes that mature in 2022, notingSagicor Life Inc.’s guarantee. The outlook of these Credit Ratings(ratings) is stable.
The rating upgrades of SLJ reflect the organization’s strong brandrecognition, favorable market position, strong earnings in its corebusiness lines and adequate risk-adjusted capital position. A.M. Best,however, does recognize its business risk exposures in Jamaica.
SFC is publicly traded on the Barbados, Trinidad and London stockexchanges. SFC’s overall leverage position remains within A.M. Best’sexpectations for its current rating level. In addition, diversifiedsources of cash and profitable operations provide adequate debt servicecoverage.
The ratings reflect the organization’s adequate capitalization,consistent earnings in its core business lines and strong brandrecognition in the Caribbean market. Through its operating subsidiaries,SFC has a long operating history, very strong brand recognition anddiversified geographical reach, all of which contribute to a favorablecompetitive market position throughout the Caribbean region. Supportedby profitable operations, SFC’s consolidated risk-adjusted capitalposition remains adequate, including its business risk exposures in itsJamaica operations.
Offsetting rating factors include SFC’s significant business andfinancial exposure to Jamaica’s economy through its controlling interestin Sagicor Group Jamaica (a recently created holding company of SLJ) andemerging country risks in Barbados. While A.M. Best believes suchexposures are partially mitigated by the sustained favorable performanceof SFC’s Jamaica operations, the somewhat stabilized financial conditionin Jamaica and geographic diversification in the Caribbean region,further deterioration in Jamaica’s or Barbados’ financial conditionpotentially could stress SFC’s overall operating results. Additionally,SFC may face challenges to significantly increase its earnings andpremium growth given the headwinds to economic growth in the Caribbeanregion.
Sagicor Life USA’s earnings are highly sensitive to annuity growth andrelies on reinsurance to manage growth. The company continues to enjoyparental support, mainly in the form of surplus notes, to maintain anadequate level of risk-adjusted capital in light of expansion expensesand the low interest rate environment. A.M. Best expects such support tocontinue as the U.S. market is viewed as an important source of futuregrowth.
The ratings of Sagicor General are based upon its supportive balancesheet strength, excellent operating performance and strong marketprofile in Barbados as one of the top property and auto writers in thatcountry. The company also has a significant presence in Trinidad andTobago and operates in other Caribbean territories. The ratings also arereflective of the company’s strategic role within SFC, the synergiesderived as a subsidiary of SFC and brand name recognition. SagicorGeneral has continued to produce positive overall operating results,which are derived from its sound underwriting performance in conjunctionwith a steady stream of investment income, despite challenging marketconditions and a higher expense ratio in recent years that has impactedunderwriting results. These positive rating factors are partially offsetby difficult local macroeconomic conditions and the increasinglycompetitive regional insurance environment throughout the Caribbean. Inaddition, the company has significant exposure in the region to lossfrom catastrophic weather events, which is materially mitigated by acomprehensive reinsurance program backed by quality reinsurers.
This press release relates to Credit Ratings that have been publishedon A.M. Best’s website. For all rating information relating to therelease and pertinent disclosures, including details of the officeresponsible for issuing each of the individual ratings referenced inthis release, please see A.M. Best’s RecentRating Activity web page. For additional informationregarding the use and limitations of Credit Rating opinions, please view UnderstandingBest’s Credit Ratings.
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