Last update: 11-Dec-2013 5:04 pm
Wednesday, December 11, 2013
Trinidad & Tobago Guardian Online
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AM Best removes Sagicor from under reviews list
Rating agency AM Best has removed from under review with negative implications and affirmed the financial strength ratings (FSR) of several subsidiaries of Sagicor Financial Corporation. Sagicor Life Inc and Sagicor Capital Life Insurance Company Limited were affirmed A- (Excellent) with issuer credit ratings (ICR) of “a-”.
AM Best also has removed from under review with negative implications and affirmed the FSR of A- (Excellent) and ICR of “a-” of Sagicor General Insurance Inc (Sagicor General) (Bridgetown, Barbados) as well as the FSR of B+ (Good) and ICR of “bbb-” of Sagicor Life Jamaica Limited (SLJ) (Kingston, Jamaica). The outlook assigned to all the above ratings is stable.
Additionally, AM Best has removed from under review with negative implications and affirmed the FSR of A- (Excellent) and ICR of “a-” of Sagicor Life Insurance Company (Sagicor Life USA) (Austin, TX). The outlook assigned to both ratings is negative.
As well, AM Best has removed from under review with negative implications and affirmed the ICR of “bbb-” and the debt rating of “bbb” on USD 150 million, 7.5 per cent senior unsecured notes, due 2016 of the ultimate parent, Sagicor Financial Corporation (SFC) (Barbados). The outlook assigned to these ratings is stable. SFC is publicly traded on the Barbados, Trinidad and London Stock Exchanges.
The rating affirmations reflect the organisation’s continued satisfactory capitalisation, consistent earnings in its life insurance segments and favorable operating results.
All ratings were 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 SFC continues to have significant business and financial exposure to the Jamaican economy through its controlling interest in SLJ, AM Best said that it believes the exposure is somewhat mitigated by the sustained favourable performance of SFC’s Jamaican operations and the somewhat stabilised financial condition in Jamaica.
The organisation’s consolidated earnings performance, excluding losses from its discontinued lines of business at its Lloyd’s operations, which were sold earlier this month, have been consistently positive. Given SFC’s diversified geographical reach and product offerings, it enjoys a strong competitive market position throughout the Caribbean region. Supported by profitable operations, SFC’s risk-adjusted capitalisation remains adequate, including its business risk exposures in its Jamaican operations.
AM Best said that the parent company’s overall leverage position is well within AM Best’s expectations for its current rating level. In addition, diversified sources of cash and profitable operations provide adequate coverage to service its debt obligations.
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.
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