Press Release - OCTOBER 27, 2017

A.M. Best Affirms Credit Ratings of BF&M Limited and Its Subsidiaries

 Wayne Kaminski
Senior Financial Analyst—L/H
+1 908 439 2200, ext. 5061

Charles Huber
+1 908 439 2200, ext. 5122

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


A.M. Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of BF&M Life Insurance Company Limited (BF&M Life), BF&M General Insurance Company Limited (BF&M General) and Island Heritage Insurance Company, Ltd. (Island Heritage) (Cayman Islands). Furthermore, A.M. Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of Insurance Corporation of Barbados Limited (ICBL) (Barbados). A.M. Best also has affirmed the Long-Term ICR of “bbb” of the parent company, BF&M Limited (BF&M). All companies are domiciled in Hamilton, Bermuda, unless otherwise stated. The outlook of these Credit Ratings (ratings) is stable.

The ratings of BF&M Life, BF&M General and Island Heritage are based on strong risk-adjusted capitalization, the long-term trend of shareholder equity growth, favorable earnings from the companies’ geography and product-diversified lines of business. BF&M Life and BF&M General each garner stable market share in their core market of Bermuda. BF&M’s consolidated risk-adjusted capitalization is strong, including Minimum Continuing Capital and Surplus Requirements and Best’s Capital Adequacy Ratio (BCAR), and has grown steadily since 2013. BF&M has a history of positive results primarily supported by the stable and strong performance of the group health segment, and positive property/casualty earnings. Financial results further benefit from smaller lines of business such as pension administration (group and individual), group life and reinsurance.

The very favorable medical loss ratio in the group health segment has driven stronger earnings over the long term. The company is the second largest health carrier by market share in Bermuda, which is driven by its high persistency level and opportunities to cross-sell across its diversified product offering.

Offsetting rating factors include losses from significant catastrophe events affecting the covered territories in the Caribbean, lack of favorable economic trends and heavy competitive pressure. A.M. Best expects the overall effect of the recent catastrophe event losses on BF&M’s consolidated results to produce a sizeable decline in 2017 compared with prior years, where Island Heritage is expected to sustain net losses after all reinsurance claims are settled. In addition, despite some incremental improvement in economic growth tied to Bermuda’s participation in the America’s Cup; economic conditions in Bermuda remain challenging. The long-term trend of population decline may shrink health and property markets. All three major competing Bermudian companies write the same lines and pricing is transparent, therefore they mainly compete on service and quality.

The ratings of ICBL reflect the company’s strong risk-adjusted capitalization, profitable operating results and leading, albeit limited, market position in Barbados. The company’s shares are traded on the Barbados Stock Exchange; however, the majority shareholder is BF&M. In addition, the ratings take into account ICBL’s strategic affiliation with BF&M and the implied support that could be provided if needed. Partially offsetting these positive rating factors are ICBL’s high geographic concentration on the island of Barbados, its significant exposure to below investment grade government bonds and its heavy reliance on reinsurance, which is used to mitigate its exposure to severe weather events.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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