|[August 20, 2014]
A.M. Best Affirms Ratings of Sagicor Financial Corporation and Its Subsidiaries
OLDWICK, N.J. --(Business Wire)--
A.M. Best has affirmed the financial strength rating (FSR) of A-
(Excellent) and the issuer credit ratings (ICR) of "a-" of Sagicor
Life Inc. and Sagicor Capital Life Insurance Company Limited
(both domiciled in St. Michael, Barbados).
A.M. Best has also affirmed the FSR of A- (Excellent) and the ICR of
"a-" of Sagicor General Insurance Inc. (Sagicor General)
(Bridgetown, Barbados), as well as the FSR of B+ (Good) and the ICR of
"bbb-" of Sagicor Life Jamaica Limited (SLJ) (Kingston, Jamaica).
The outlook for all ratings is stable.
In addition, A.M. Best has revised the outlook to stable from negative
and affirmed the FSR of A- (Excellent) and the ICR of "a-" of Sagicor
Life Insurance Company (Sagicor Life USA) (Austin, TX).
Concurrently, A.M. Best has affirmed the ICR of "bbb-" and the debt
rating of "bbb" on USD 150 million, 7.5% senior unsecured notes, due
2016 of the ultimate parent, Sagicor Financial Corporation (SFC)
(Barbados). The outlook for these ratings is stable. SFC is publicly
traded on the Barbados, Trinidad and London Stock Exchanges.
The rating affirmations reflect the organization's adequate
capitalization, consistent earnings in its core life insurance segments
and strong brand recognition in the Caribbean marketplace. The
organization's consolidated earnings performance, excluding losses from
its discontinued lines of business at its European operations (which
have been sold), 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 capitalization remains
adequate, including its business risk exposures in its Jamaican
Offetting rating factors include SFC's significant business and
financial exposure to the Jamaican economy through its controlling
interest in SLJ and emerging country risks in Barbados. While A.M. Best
believes such exposures are partially mitigated by the sustained
favorable performance of SFC's Jamaican operations, somewhat stabilized
financial condition in Jamaica and geographic diversification in the
Caribbean region, further deterioration in Jamaica or Barbados'
financial condition could potentially stress SFC's overall operating
results. Additionally, SFC faces ongoing challenges to sustain earnings
and premium growth from its core mature Caribbean life/health insurance
The outlooks for the ratings of Sagicor Life USA were changed from
negative to stable due to its improved statutory operating performance
in both the life and annuity lines of business. Although annuity growth
has pressured historical earnings, Sagicor Life USA entered into a
reinsurance agreement and lowered production in order to reduce the
capital strain associated with its annuity business growth. In addition,
the company continues to maintain an adequate level of risk-adjusted
capital, mainly from parental support rather than organic growth in
surplus. However, given that historical support was mainly in the form
of internal surplus notes, surplus notes constitute more than half of
its capital and surplus position.
Sagicor General is among the largest property/casualty insurers in
Barbados and has a significant presence in Trinidad and Tobago,
Dominica, St. Lucia and Antigua. Sagicor General has continued to
produce positive overall operating results, which are derived from its
sound underwriting performance in conjunction with a steady stream of
investment income. The company also benefits from the synergies derived
as a subsidiary of SFC.
The enterprise's overall leverage position is within A.M. 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.
While positive rating movement is unlikely over the near to medium term,
factors that could lead to negative rating actions include a decline in
SFC's earnings and capital, erosion in the economic conditions in the
countries in which SFC operates, particularly Jamaica and/or Barbados,
or further deterioration in the credit quality of SFC's asset portfolio.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS
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