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Sagicor Financial Company Limited's headquarters in St Michael, Barbados. (File photo)

AM Best rates Sagicor’s insurance companies

Sagicor Financial Company Limited's headquarters in St Michael, Barbados. (File photo)

Jamaican operation lowest ranked

Insurance ratings agency AM Best has assigned excellent ratings to Sagicor’s insurance companies in Bermuda, Barbados, and the US, while affirming good ratings to the parent and Jamaican operations.

Sagicor Reinsurance Bermuda Ltd, Barbados-based Sagicor Life Inc and Sagicor General Insurance Inc, and Sagicor Life Insurance Company in Austin, Texas, all received A- for financial strength rating (FSR) and A- for long-term issuer credit ratings (ICR) from the AM Best, which also provided a stable outlook for each subsidiary. At the same time, the agency assigned a B++ FSR and bbb+ ICR to Jamaica with a stable outlook.

AM Best highlighted in a release that it “affirmed the Long-Term ICR of bbb- (good) of the ultimate parent, Sagicor Financial Company Ltd (Bermuda) and the long-term issue credit rating (long-term IR) of bbb (good) on its US$400 million, 5.3 per cent senior unsecured notes that mature in 2028”. It also assigned the parent a stable outlook.

In its assessment, the credit rating agency justified its assignment for the Sagicor Reinsurance Bermuda Ltd, stating that the company had a “very strong” balance sheet, adequate operating performance, limited business profile, and appropriate enterprise risk management (ERM).

With regard to both Barbados-based subsidiaries, AM Best gave a similar assessment, with the exception that both had favourable business profiles. In particular, the agency commended Sagicor General Insurance for its “long history of profitable performance and benefits from strong brand recognition and market position” in its respective market. Moreover, the company has the strongest level of risk-adjusted capitalisation as measured by Best’s capital adequacy ratio.

For Sagicor Life Insurance, the company’s rating reflects “adequate” balance sheet strength, marginal operating performance, neutral business, and appropriate ERM.

“AM Best has concern over the global and regional economic certainty impacting balance sheet strength and operating performance of insurance companies operating in the Caribbean”

 “The company continues to benefit from parental support in the form of a capital maintenance agreement to maintain an adequate level of risk-adjusted capital that covers expenses-related new business growth. However, historical support was mainly in the form of internal surplus notes,” AM Best explained, adding that it anticipates Sagicor Life Insurance’s “risk-adjusted capital position to improve in the near term with agreements to reinsure annuity and life business with Sagicor Reinsurance Bermuda Ltd”.

Notwithstanding the excellent rating of both Barbados-based companies, the agency warns the ratings are measured against an elevated level of country risk in Barbados.

In the meantime, Sagicor Life Jamaica Limited received a rating reflecting a very strong balance sheet, strong operating performance, neutral business profile, appropriate ERM.

The Sagicor Jamaica Building in New Kingston (File photo)

“Sagicor Life Jamaica Limited has a history of increasing high earnings and revenue and a strong market position in the Jamaican market,” the credit rating agency wrote.

“AM Best has concern over the global and regional economic certainty impacting balance sheet strength and operating performance of insurance companies operating in the Caribbean,” it further outlined.

However, with the company’s corporate structure having an international footprint, along with increased capital backing each year, AM Best said this reduces its concern for Sagicor’s group of companies.