Insurance credit rating agency AM Best issued an excellent financial strength (A) and strong credit ratings (a) to Antigua and Barbuda-based Caribbean Alliance Insurance Company (CAIC), with a stable outlook.
CAIC operates in 15 territories across the Caribbean, providing both personal and commercial insurance.
“The ratings reflect CAIC’s balance sheet strength, which AM Best categorises as strongest, as well as its strong operating performance, neutral business profile, and appropriate enterprise risk management,” the US-based rating agency said.
As a result, AM Best commended CAIC’s financial strength was due to its “risk-adjusted” capital base and operating performance. Notwithstanding, the US-based rating agency raised concern over CAIC’s “dependence on reinsurers to protect its balance sheet from the impact of catastrophic events”.
A strong leadership position in Antigua and Barbuda, geographic spread of risk, and the management team’s extensive knowledge of its operating territories were factors that also contributed to CAIC’s rating.
“The ratings also consider CAIC’s conservative management philosophy and effective risk management procedures, which include a comprehensive reinsurance programme developed to mitigate exposure to natural catastrophes,” AM Best added in its review.
AM best warned, however, that soft market conditions, high cost of reinsuring property and weak economic conditions in several territories would not only threaten CAIC’s profit margins but also its ability to retain clients.