SAGICOR FINANCIAL CORPORATION (SFC), which is headquartered in Barbados, and many of its subsidiaries across the region and in the United States have been removed from AM Best’s “under review with negative implications” rating while the outlook for most of the financial conglomerate’s operations have been described as “stable”.
The international rating agency, which tracks insurance companies around the world, said in a release last week that it had affirmed the issuer credit ratings (ICR) of “a-” of Sagicor Life Inc. and Sagicor Capital Life Insurance Company Limited, both domiciled in Barbados.
AM Best also removed from “under review with negative implications” and affirmed the FSR of A- (Excellent) and ICR of “a-” of Sagicor General in Barbados as well as the FSR of B+ (Good) and ICR of “bbb-” of Sagicor Life Jamaica Limited. The outlook assigned to all the above ratings is stable.
The 100-year-old ratings company with offices in the United States, Britain, Hong Kong and Dubai, removed from under review with negative implications and affirmed the FSR of A- (Excellent) and ICR of “a-” of Sagicor Life USA. The outlook assigned to both ratings is negative.
Concurrently, the agency also removed from under review with negative implications and affirmed the ICR of “bbb-” and the debt rating of “bbb” on US$150 million senior unsecured notes, due 2016 of the ultimate parent, Sagicor Financial Corporation in Barbados. The outlook assigned to these ratings is stable.
According to AM Best, the rating affirmations reflected Sagicor’s “continued satisfactory capitalization, consistent earnings in its life insurance segments and favourable operating results”.
It noted that all ratings had been placed under review following the announced debt exchange programme by the government of Jamaica, which AM Best noted was the second such programme in three years. Although Sagicor Financial Corporation continued to have significant business and financial exposure to the Jamaican economy through its controlling interest in Sagicor Life of Jamaica.
AM Best said the exposure was “somewhat mitigated by the sustained favourable performance of SFC’s Jamaican operations and the somewhat stabilized financial condition in Jamaica”.
It added: “The organization’s consolidated earnings performance, excluding losses from its discontinued lines of business at its Lloyd’s operations, which are in the process of being sold, have been consistently positive.”
“Given [Sagicor’s] diversified geographical reach and product offerings, it enjoys a strong competitive market position throughout the Caribbean region. Supported by profitable operations, [Sagicor’s] risk-adjusted capitalization remains adequate, including its business risk exposures in its Jamaican operations,” AM Best pointed out.
Meanwhile, AM Best assigned a “negative” outlook for Sagicor Life USA due to its consistent statutory operating losses on both the life and annuity lines of business; however, the losses have consistently been declining as it stabilizes its new business growth.
According to AM Best, it wanted to see a more diversified business profile. “While the company maintains an adequate level of risk-adjusted capital, this is the result of parental support rather than organic growth,” the rating agency said.
At the same time, AM?Best said: “Offsetting rating factors include the ongoing challenges SFC faces to sustain earnings and premium growth from its core mature Caribbean life/health insurance marketplace, in addition to its continued exposure in Jamaica, which could potentially stress SFC’s financial results, should market and economic conditions further deteriorate.
“Key rating factors that could lead to negative rating actions include a decline in SFC’s earnings and capital, further deterioration in Jamaica (given the region’s continued elevated sovereign risk) or deterioration in the financial position of SFC.”
SFC is publicly traded on the Barbados, Trinidad and London Stock Exchanges. (GE/PR)
