Best’s News & Research Service - November 07, 2019 11:31 AM (EST)
AM Best Removes From Under Review, Affirms Credit Ratings of Bahamas First Holdings Limited’s Operating Subsidiaries
- November 07, 2019 11:31 AM (EST)
Oldwick //BestWire// - AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of Bahamas First General Insurance Company Limited (BFG) (Nassau, Bahamas) and Cayman First Insurance Company Limited (CFI) (Cayman Islands), the property/casualty operating subsidiaries of Bahamas First Holdings Limited (Nassau, Bahamas) (BFH). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings of BFG and CFI reflect the group’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
BFG operates in the Bahamas only, where it is the leading domestic insurer with strong brand recognition and competes for business among the other top insurance writers on the island. However, the operating disruption and the catastrophic damages caused by Hurricane Dorian prompted an AM Best response to place BFH under review with developing implications, along with the other rated Bahamas domiciled market participants. AM Best has since evaluated BFH’s loss estimates and related reinsurance contracts and expects this to be an earnings event because loss estimates are within its current reinsurance coverage, and the net impact to the organization is anticipated to be its contract retention amount.
The balance sheet strength is derived from the group’s risk-adjusted capitalization being at the strongest level and its ability to raise capital if needed. This is offset partially by a high dependence on the reinsurance markets to protect capital in the event of natural catastrophes. In recent years, the group’s operating performance has been favorable, especially in years with little impact from major hurricanes affecting the Bahamas or Cayman Islands. Overall earnings have supported capital growth, despite highly competitive markets and difficult economic conditions. Furthermore, capital growth may be constrained because of the operating companies’ continuing obligation to pay dividends to BFH to service its outstanding debt.
This press release relates to Credit Ratings that have been published on AM 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 AM 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 AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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